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Complete the Capital Budgeting Case - Includes an Excel Spreadsheet and a Paper

For your answer to be accepted you must complete the ENTIRE assignment as it is outlined below. This includes a spreadsheet with formulas and a paper.

 

Capital Budgeting Case

 

Your company is thinking about acquiring another corporation. You have two choicesthe cost of each choice is $250,000. You cannot spend more than that, so acquiring both corporations is not an option. The following are your critical data:

 

Corporation A

 

Revenues = $100,000 in year one, increasing by 10% each year

Expenses = $20,000 in year one, increasing by 15% each year

Depreciation expense = $5,000 each year

Tax rate = 25%

Discount rate = 10%

 

Corporation B

 

Revenues = $150,000 in year one, increasing by 8% each year

Expenses = $60,000 in year one, increasing by 10% each year

Depreciation expense = $10,000 each year

Tax rate = 25%

Discount rate = 11%

 

Compute and analyze items (a) through (d) using a Microsoft Excel spreadsheet. Make sure all calculations can be seen in the background of the applicable spreadsheet cells. In other words, leave an audit trail so others can see how you arrived at your calculations and analysis. Items (a) through (d) should be submitted in Microsoft Excel; indicate your recommendation (e) in the Microsoft Excel spreadsheet;  the paper stated in item (f) should be submitted consistent with APA guidelines.

 

a.     A 5-year projected income statement

b.    A 5-year projected cash flow

c.     Net present value (NPV)

d.    Internal rate of return (IRR)

e.     Based on items (a) through (d), which company would you recommend acquiring?

f.     Write a paper of no more 1,050 words that defines, analyzes, and interprets the answers to items (c) and (d). Present the rationale behind each item and why it supports your decision stated in item (e). Also, attempt to describe the relationship between NPV and IRR. (Hint. The key factor is the discount rate used.)  In addition to the paper, a Micosoft Excel spreadsheet showing your projections and calculations must be shown and attached.

Answer
Submitted by AlgebraExpert on Tue, 2014-08-05 13:19
teacher rated 94 times
4.851065
price: $9.99

QRB/501 QRB 501 Week 6 - Learning Team Assignment - Capital Budgeting Case - A+, work shown, and original!

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xxxxxxx QRB 501 Week x - Learning Team xxxxxxxxxx x Capital xxxxxxxxx Case x xxx xxxx shown, and xxxxxxxxx

file1.zip preview (1119 words)

xxx xxx xxxx x Learning xxxx xxxxxxxxxx - xxxxxxx xxxxxxxxx Case xxxxxxxxx

xxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxx x Corporation B
xxxx 1 2 3 4 x 1x x x 5
xxxxxxxxxxxxxxxxxxxx xxxxxx xxxxxx146410.0000000001xxxxxx 162000 174960188957 xxxxxx
Less Expensesxxxxx23000 xxxxx30417xxxxx xxxxxxxxxx72600 xxxxx 87846
xxxxxx Before xxxxxxxxxxxx xxxxx xxxxx xxxxx 102683xxxxxx xxxxx96000 102360 109097 116227
xxxx xxxxxxxxxxxx xxxx xxxx xxxx5000xxxx xxxxx xxxxx10000 1000010000
Profit Before Taxes 75000 xxxxx 89550 97683 10643080000 xxxxx xxxxxxxxxxxxxxxx
Less Taxesxxxxx 20500 22388 xxxxxxxxxx 20000215002309024774 26557
Net xxxxxx xxxxx xxxxxxxxxxxxxxx79822 6000064500 69270 74323xxxxx
Net Incomexxxxx xxxxx26450xxxxx xxxxx xxxxx66000xxxxx xxxxx87846
Add xxxxxxxxxxxx 0 x 0 0x xxxxx x 00 x
xxxxxxxxx Cash xxxx 20000 23000 xxxxx3041734980 xxxxx 66000 72600xxxxxxxxxx
xxxx Cash flowPV10%DR xx Cash flowPV11%DR PV
x xxxxxxxxxxxxxxxxxxxxxx1xxxxxxx
x xxxxx xxxxxxxxxxxx xxxxxxxxxxxxxxxx700000.9009009009 xxxxxxxxxxxxxxxx
xxxxxx xxxxxxxxxxx 54958.677685950474500 xxxxxxxxxxxx xxxxxxxxxxxxxxxx
x xxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxx79270 xxxxxxxxxxxx 57961.5407957263
x78262xxxxxxxxxxxxxxxxxxxxxxxxxxxx84323 0.658730974155546.1719328288
x 84822 xxxxxxxxxxxx xxxxxxxxxxxxxxxx89671 0.5934513281 xxxxxxxxxxxxxxx
NPVx 20,979.41 xxx40252
xxx xxxxxxxxx 16.94%
Yearxxxx flow xxxxxxxxxx xxxx

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Answer
Submitted by tedhuge11 on Mon, 2014-02-10 06:03
teacher rated 34 times
4.117645
purchased 2 times
price: $40.00

Capital Budgeting Case...A++ solution...

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xx

xx

xx

 

file1.docx preview (732 words)

Capital Budgeting

xxxx

Date

Teacher

xxxxxxxxxx Name

Capital xxxxxxxxxx which is also called "investment appraisal," is the xxxxxxxx process xxxx to xxxxxxxxx xxxxx of xx organization's long xxxx xxxxxxxxxxx xxxx xx xxx machinery, replacement machinery, xxx plants, xxx xxxxxxxxx and xxxxxxxx development projects are worth xxxxxxxxx It xx to xxxxxx xxx xxxxx capital investments xx expenditures. xxx xx xxx xxxxxxx xxxxx of xxxxxxx budgeting investments is xx xxxxxxxx xxx xxxxx xx xxx xxxx xx xxx shareholders.

Many formal xxxxxxx xxx xxxx in capital budgeting, xxxxxxxxx the techniques xx followed:

xxx present xxxxx

Internal rate xx xxxxxx

Payback xxxxxx

Profitability xxxxx

Equivalent annuity

xxxx options xxxxxxxx

Net Present Value

Net present value (NPV) xx xxxx to xxxxxxxx xxxx xxxxxxxxx project's value xx xxxxx x xxxxxxxxxx cash xxxx (DCF) valuation. This valuation requires estimating the xxxx and timing xx xxx xxx incremental xxxx xxxxx from xxx xxxxxxxx The NPV is greatly xxxxxxxx

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file2.xlsx preview (565 words)

xxxxxx

xxxxxxxxxxx
xxxxxxx xxxxxxxxx Case
Your company xx thinking about xxxxxxxxx xxxxxxx corporation. You xxxx two choices—the cost of xxxx xxxxxx xx xxxxxxxxx xxx cannot xxxxx more xxxx that, xx acquiring both corporations is not xx option. xxx xxxxxxxxx xxx xxxx critical data:
Corporation x
xxxxxxxx = xxxxxxxx xx xxxx one, increasing xx xxx xxxx xxxx
Expenses x xxxxxxx in year xxxx increasing xx 15% each year
xxxxxxxxxxxx xxxxxxx = xxxxxx xxxx xxxx
Tax xxxx = xxx
xxxxxxxx xxxx = xxx
Corporation x
xxxxxxxx = $150,000 xx year one, increasing xx xx xxxx xxxx
Expenses = $60,000 xx year one, increasing by xxx each xxxx
Depreciation expense = xxxxxxx each xxxx
xxx rate x 25%
Discount xxxx = xxx
Compute xxx xxxxxxx items xxx xxxxxxx xxx xxxxx x xxxxxxxxx® xxxxx® spreadsheet. xxxx xxxx all xxxxxxxxxxxx can be xxxx xx xxx xxxxxxxxxx xx the applicable spreadsheet cells. xx xxxxx xxxxxx leave xx audit trail so others xxx xxx how xxx xxxxxxx xx your calculations xxx analysis. xxxxx xxx

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Answer
Submitted by Alvin on Mon, 2014-02-10 04:31
teacher rated 68 times
4.308825
purchased 3 times
price: $19.99

"Capital Budgeting Corporations A & B Case Paper & Solution"...A+ WORK! GOOD LUCK

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xxxx assignment is attached..Thanks xxx xxxxxxxxxx my this assignment!

file1.xls preview (505 words)

xxxxxxxxxxx A

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxx A
xxxxxxxxx xxxxxx xxxxxxxxx
xxxx
1 23 4 x
xxxxxxxxxxxxxxxx$110,000 xxxxxxxx xxxxxxxxxxxxxxxx
Expenses $20,000 xxxxxxxxxxxxxx xxxxxxx xxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxx$5,000$5,000 $5,000
xxxx $75,000 $82,000$89,550xxxxxxx xxxxxxxx
Taxesxxxxxxxxxxxxxxxxxxxx$22,387.50 $24,420.63 $26,607.47
xxx xxxxxx$56,250.00$61,500.00xxxxxxxxxxxxxxxxxxxx$79,822.41
xx Operating Cash xxxx
Year
012 xx5
xxxx $75,000 $82,000 xxxxxxxxxxxxxx$106,430
xxxx xxxxxxxxxxxxxxxxxxxxxxxx xxxxxx$5,000 xxxxxx
Less: Taxes ($18,750.00)xxxxxxxxxxxx ($22,387.50) ($24,420.63) ($26,607.47)
Operating Cash xxxx xxxxxxxxxxxxxx $72,163 xxxxxxx $84,822
xx Total Projected xxxx xxxxx
Year
0 12 3 4 5
xxxxxxx xxxxxx xxxxxxxxxxxxx
xxxxxxxxx xxxx Flow xxxxxxxxxxxxxx$72,163xxxxxxxxxxxxxx
Total xxxxxxx xxxx xxxxxxxxxxxxxxxxx$61,250.00 xxxxxxxxxx xxxxxxxxxx$78,261.88 xxxxxxxxxx
xx xxx
Year
x x xxx5
xxxx Flow xxxxxxxxxxxxx $61,250.00 $66,500.00xxxxxxxxxx xxxxxxxxxx $84,822.41
PV Factor @10%1xxxxxx0.8264 xxxxxx xxxxxx 0.6209
xx xxxxxxxxxxxxxxxxxxxxxxx$54,958.68 xxxxxxxxxxxxxxxxxxxx xxxxxxxxxx
xxx$20,979.20
xxx13.05%
MIRRxxxxxx
xx1.08
xxxxxxx xxxxxx
xxxx xxxx xxxxxxxxxxx Investment Cash xxxxxxEnding xxxxxxxxxxx Investment
0 xxxxxxxx$0 $250,000
1 $250,000$61,250.00$188,750.00
2xxxxxxxx$66,500.00 $122,250.00
x $122,250xxxxxxxxxx xxxxxxxxxx
4$50,087xxxxxxxxxx ($28,174.38)
xxxxx xxxx xxxxxxx need xx xx recovered xx xxxx xx while the xxxx xxxxxx xx xxxx 4 xx xxxxxxxxxx
xxxx to xxxxxxxxx the fraction xx year xx we divide $50,088/$78,261.88 x 0.64. xxxxxxxxx xxx payback xxxxxx xx xxxx years
xxxxxxxxxx xxxxxxx period
Year Beg. Unrecovered xxxxxxxxxx Cash xxxxxxEnding xxxxxxxxxxx

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xx a xxxxxxxxxxxxxxxx xxxxx define, analyze, xxx xxxxxxxxx xxx answers xx items (c) through (h). xx xxxx same memo, xxxxxxx the xxxxxxxxx xxxxxx each item and why xx xxxxxxxx your decision stated in xxxx (i). Also, attempt xx describe xxx xxxxxxxxxxxx    xxxxxxxxxx xxx and xxxx xxxxxx xxx key factor here is the xxxxxxxx xxxx xxxxxx xx this xxxxx xxxxxxx xxx xxx xxxxx analyze projects differently if xxxx had unequal projected years (i.e., xx xxxxxxxxxxx x xxx x xxxxxx projection and xxxxxxxxxxx B had x xxxxxx projection)  

xxxxxx find xxxxx a xxxxxxxx xxxxxxxxxxx xxxxxxxx of both corporations. Based xx xxxx xxxxxxxxx x xxxxx xxxxxxxxx xxxxxxxxx xxxxxxxxxxx x as it mainly has a xxxxxx net xxxxxxx xxxxx than xxxxxxxxxxx A.

 

xxxxxxxxxxxxx

 

 

Corporation x

Corporation x

x

NPV

xxxxxxxxxx

xxxxxxxxxx

d

xxx

xxxxxx

16.94%

x

Payback xxxxxx

3.64 years

xxx xxxxx

x

xx

xxxx

1.19

g

xxxxxxxxxx xxxxxxx xxxxxx

xxx years

xxx xxxxx

h

xxxx

xxxxxx

13.94%

xxx xxxxxxx Value

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