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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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file1.xls preview (697 words)
|xxxxxxxx xxxxxxxx||* 300,000x||xxxxx|
|xxxxxxxxxx xxxx xxxxxxx||* 100,000||2.50%|
|Total Current Liabilitiesx||* 400,000|
|Long-term xxxx Payablex||* 400,000x||xxxxxx|
|xxxxxxxx Payablex||x xxxxxxxxx||30.00%|
|xxxxx xxxxxxxxxxxx||x 1,600,000|
|Common Stock xxxxxx||x 1,500,000||xxxxxx|
|xxxxxxxxx xxxxxx||x 500,000||xxxxxx|
|xxxxx Liabilities and Equityx||x xxxxxxxxx||100.00%|
|**the short term interest rate xx xx xxxxx M3_A2)|
|xxxxx long xxxx xxxxxxxx xxxx xx xx xxxxx M3_A2)|
|**long term equity xxxxxxxx xxxx xx 10% (from xxxxxx|
|***since xxx corporate tax rate xx not xxxxx xx is xxx xxxxxxxx xx xxx WACC|
|Cost xx Debt =||8%|
|xxxx xx Equity xx||10%|
|WACC for Genesis|
|xxxxxx of Debt||xxx|
|Weight of xxxxxxx||71%|
|Initial Investment||xxxx Flow||Cash xxxxx||xxxx Flow||Cash flowx||xxxx Flow||Cash xxxxx||xxxx xxxxx||Cash xxxxx||Cash flow||Cash flow|
|Project A: 25-emp facility||xxxxx||xxxx||xxxx||xxxxx||xxx||xxx||1000||xxxx||1000x||1000||xxxx||xxxxxx|
|Project xx 40-emp facilityx||xxxxxx||xxxx||xxxxx||xxxx||xxxx||xxxx||xxxx||1500||1500x||1500x||1500xx||xxxxxxx|
|xxxxxxx xx xxxxxx facility||xxxxx||-300x||-400||xxxx||600x||xxxx||xxxxx||xxxxx||2000x||xxxxx||2000xx||xxxxxxxx||> Project C xx xxx xxxx option|
|xxxxxxxxx 1 - xxxxx xxxxxxxxx||-1500x||xxxxx||xxx||xxx||xxxx||xxxx||800x||800x||xxx||xxxx||800xx||1012.43|
|Equipment x -|
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file2.docx preview (1499 words)
xxxxxxx – xxxxxxx Budget
xxx xxxxxxxx on xxxxxxx xxxxxxx xx among xxx xxxx significant x xxxx xxx to xxxxx x xxxxxxxx to xxxxx x new xxxxx xx expand into x xxxxxxx xxxxxx xxx influence xxx performance of xxx firm over the xxxx xxxxxxx The xxxxxxx xxxxxxxxx decision xxxxxxxx xxx xxxxxxxx of xxxxxxxxxxxx for a project xxxx x life xx xx least xxx xxxx xxx usually considerably longer. Capital xxxxxxxxx xxxxx in determining that xxx xxxxxx x firm xxxxxx xxx capital.
xxxxxxxxx Capital xxxxxxxxx options used are xxxxxxx period (which analysis xxx time xx xxxxxx of xxxxx which xx required xx cover the initial outlay or investment in xxx project), xxxxxxxxxx xxxx of return xxxxx is also xxxxx xx Return on xxxxxxxxxxx which xxxxxxxx xxx xxxxxxxxxxxxx of xx investment xxxxxxxxxxx xxx financial statements), xxxxxxxxxx Payback xxxxxx (which xxxxxxxx xxx xxxx xx xxxxxx of xxxxx xxxxx is required to xxxxx xxx xxxxxxx outlay xx xxxxxxxxxx xx the
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