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Genesis Capital plan report
The Genesis operations management team, nearing completion of its agreement with Sensible Essentials, was asked by senior management to present a capital plan for the operating expansion. The capital plan was not to be a wish list but an analysis of the necessary expenditures to successfully establish a fully equipped operating facility overseas.
In addition, senior management requested meaningful financial and operating metrics to ensure that the performance objectives for the facility were being met. The operations management team was given five days to accomplish the following:
Calculate the firm’s WACC.
Prepare and analyze each planned capital expenditure.
Evaluate, rank, and recommend the capital expenditures according to beneficial value to the organization, using evaluation tools NPV, payback, and IRR. Evaluation, ranking, and recommendations should be by category of expenditures. For example, facility, equipment 1, 2, and 3, and inspection.
Using the selected choices in part three, calculate the full cost of establishing a fully equipped facility. This would include the facility, equipment 1, 2, and 3, and inspection. In addition, calculate the payback, NPV, and IRR for the completed facility.
Construct and recommend between three and five metrics to measure the performance of the organization. At least one metric should be dividend decision-making driven.
Prepare an executive summary along with a separate document showing the calculations.
Following the example of the operations management team, do the following:
Download the Capital Budgeting spreadsheet, and compute the WACC for Genesis.
Using the information provided in the spreadsheet, analyze Genesis’s project options.
Using the information provided, calculate the periodic and cumulative net cash flows for each potential project and its associated options. Please note that there are 5 projects (facility, equipment pieces 1, 2, and 3, and internal inspection) and that each project offers multiple configuration options (facility size, equipment type, etc.).
Evaluate, rank, and recommend a specific option for each capital project according to beneficial value to the organization, using evaluation tools NPV, payback, and IRR.
Construct and recommend between three and five metrics to measure the performance of the new operating strategy. At least one metric should reflect dividend policy as it relates to rewarding shareholders.
Prepare an executive summary describing your recommendations for each project and the overall cost, net cash flows, and expected returns of the operating configuration that you recommend. Be sure to justify your recommendations in terms of the investment criteria applied in Step 3 above. Be sure to report the full cost of the facility as it is configured per your recommendations. Present and justify your operating strategy performance metrics.
Your complete report should include all of your calculations as appendices (5 pages, or 1 page for each project).
Write a 5–6-page report in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstinitial_M6_A2.doc.
March 17, 2012, deliver your assignment to the M6: Assignment 2 Dropbox.
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Calculate xxx xxxx’x xxxxx
x calculation xx a xxxxxx cost of xxxxxxx in xxxxx xxxx category of xxxxxxx xx proportionately xxxxxxxxx xxx xxxxxxx xxxxxxx x common stock, preferred xxxxxx xxxxx and any other xxxxxxxxx debt x are xxxxxxxx in x xxxx calculation.
WACC is the xxxxxxx xx xxx xxxxx xx xxxxx xxxxxxx of xxxxxxxxxx each xx xxxxx xx xxxxxxxx by its respective xxx in the xxxxx situation. By xxxxxx a xxxxxxxx xxxxxxxx xx xxx xxx xxx xxxx interest the company has to xxx for every xxxxxx xx xxxxxxxxx x xxxxxx WACC xx xxx overall required xxxxxx on the firm xx x xxxxx xxxx as xxxxx it is often xxxx xxxxxxxxxx by xxxxxxx directors to determine the economic feasibility xx xxxxxxxxxxxx opportunities and xxxxxxxx xx is the xxxxxxxxxxx discount rate xx use for xxxx xxxxx xxxx risk that xx similar to that xx xxx overall xxxxx
Where: xx = cost of equity Rd = xxxx of debt x = xxxxxx value xx xxx xxxxxx xxxxxx x = xxxxxx xxxxx xx the xxxxxx debt x x x x x E/V = xxxxxxxxxx xx
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file2.xlsx preview (546 words)
|Accounts xxxxxxx||x 300,000||xxxxx||xx|
|xxxxxxxxxx Note xxxxxxx||* 100,000x||2.50%x||xx|
|xxxxx xxxxxxx Liabilities||x 400,000x||xx|
|Long-term Note Payablex||* xxxxxxx||xxxxxxx||xx|
|xxxxxxxx xxxxxxx||x xxxxxxxxx||30.00%||9%|
|Total Liabilites||* 1,600,000x||xx|
|xxxxxx Stock xxxxxx||* 1,500,000||37.50%||xxx|
|Operating xxxxxx||* 500,000||xxxxxxx||10%x||xxxx|
|Total Liabilities xxx Equityx||x xxxxxxxxxx||100.00%|
|Genesis Captial xxxxxxxx||xxxxxxx|
|Initial Investment||xxxx Flow||xxxx Flowx||xxxx Flowx||xxxx flowx||Cash Flow||xxxxxxxx||Cash Flowx||Cash Flow||xxxx xxxxx||xxxx flow|
|xxxxxxx A: xxxxxx facilityx||2000||-200||-300||xxxxx||200x||xxx||1000x||xxxxx||xxxx||xxxxx||1000x||xxxx|
|xxxxxxx B: xxxxxx facilityx||xxxxx||-200x||-200||100x||400||xxx||xxxxx||1500x||1500||1500x||xxxx||xxxx|
|Project xx xxxxxx facility||xxxx||-300||xxxxx||-100x||600x||xxx||xxxx||xxxx||2000||xxxxx||xxxx||xxxx|
|Equipment 1 - fully xxxxxxxxx||1500||xxxx||xxx||200||400||200||800x||800||800x||xxxx||800||6.6|
|Equipment x - semi-automaticx||xxxxx||-50||xxxx||200x||200||300x||600||600x||600||xxx||xxxx||xxxx|
|Equipment x - xxxxxxx||xxxx||xxxx||xxx||150x||150x||150||xxx||xxx||750||xxx||750x||5|
|xxxxxxxxx 2 x Standardx||xxx||xxxx||200||xxx||250x||300||700x||700||700||xxxx||700x||5.9|
|Equipment 2 x top xx xxxx||1500x||xxxxx||275||325||325||xxxx||1500||xxxxx||xxxx||1500||1500||5.2|
|Equipment x x xxxxx xxxxxxxx||xxxx||xxxxx||xxxxx||xxx||300||350|
|xxxxxxxxx x - xxxxx xxxxxxxx||xxxx||xxxx||-100x||xxx||xxxx||175|
|Equipment x - 5-man machinex||xxx||xxxx||-200x||xxxx||xxxx||400|
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