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## Delgado Enterprises Net present Value

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Instructions:Delgado Enterprises Net present Value

Net present Value

For this assignment, refer to the scenario located in “Problems – Series A” section 10-19A of Ch. 10, “Planning for Capital Investments” of Fundamental Managerial Accounting Concepts. This scenario puts you at the task as a Senior Accountant for Donovan Enterprises to identify the preferred method and best investment opportunity for the company.

Read the scenario in the textbook and complete the activity below.

Dwight Donovan, the president of Donovan Enterprises, is considering two investment opportunities. Because of limited resources, he will be able to invest only one of them. Project A is to purchase a machine that will enable

factory automation; the machine is expected to have a useful life of four years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash

expenditures for Project A are $400,000 and for Project B are $160,000. The annual expected cash inflows are $126,000 for Project A and $52,800 for Project B. Both investments are expected to provide cash flow benefits for the

next four years. Donovan Enterprises’ desired rate of return is 8%

Required:

Compute the net present value of each project. Which project should be adopted based on the net present value approach? Round your computations to two decimal points.

Compute the approximate internal rate of return of each project. Which one should be adoptee based on the internal rate of return approach? Round your rates to six decimal points.

Compare the net present value approach with the internal rate of return approach. Which method is better in the given circumstances? Why?

Use Microsoft® Excel®—showing all work and formulas—to compute the following:

Compute the net present value of each project. Round your computations to 2 decimal points.

Compute the approximate internal rate of return for each project. Round your rates to 6 decimal points

Create a PowerPoint® presentation showing the comparison of the net present value approach with the internal rate of return approach calculated above. Complete the following in your presentation:

Analyze the results of the net present value calculations and the significance of these results, supported with examples.

Determine which project should be adopted based on the net present value approach and provide a rationale for your decision.

Analyze the results of the internal rate of return calculation and the significance of these results, supported with examples.

Determine which project should be adopted based on the internal rate of return approach and provide a rationale for your decision.

Determine the preferred method in the given circumstances and provide reasoning and details to support the method selected.

Synthesize results of analyses and computations to determine the best investment opportunity to recommend to the president of Donovan Enterprises.

Cite references to support your assignment.

HOSP 4040

Developing Benchmarks Case Study

BACKGROUND:

The development of benchmarks is a critical part of an overall continual improvement strategy.

The basic process is straight forward.

Identify those metrics that are most important to the success of the business units (in this case individual hotels).

Identify those hotels in the portfolio (owned, managed, branded) that are performing the best on each of these metrics.

Calculate a benchmark based on this data.

Publish the benchmarks and hold all of the hotels in the portfolio accountable for achieving them.

Repeat.

The devil is in the detail of course. Here are some common considerations when developing benchmarks.

Benchmarks should always be based on “like hotels”. Meaning hotels that are like each other. It would be nonsensical to attempt to hold luxury hotels and select service hotels to the same benchmarks. The hotels do not need to be the same size, because using units of production as a benchmark eliminates the differences between hotels of different sizes. For example, if a benchmark for housekeeping labor is 30 minutes per room occupied, that benchmark is the same whether the hotel is 150 or 500 rooms.

Benchmarks should always be based on the units of production. In the case of hotels, this is rooms occupied or covers served in F&B. Because pricing is varied across the country and changes constantly, benchmarking off of revenue would be unwise.

Labor benchmarks should always be based on productivity – not labor cost. Labor costs vary widely by market and are not controllable by local management. So, using labor cost for benchmarking is also counterproductive. You should always use man hours per unit sold.

Cost benchmarks should always be on units of production, and only for those expenses where the cost of the products have been negotiated for the entire portfolio – so each hotel is paying the same cost for the items.

Achievement of the benchmarks should be incorporated into both performance reviews and into incentive compensation plans for management.

The number of benchmarks should be limited. Focus on what is most important.

Benchmarks should be developed using the average of the highest performing group of hotels – not on an individual hotel. Most benchmarking programs use either the highest decile (best 10%) or quartile (best 25%) averages.

The Case

You are an asset manager working for an owned portfolio of 20 “like hotels”. Your company has established several benchmarks, and these have been used and measured for years. Each year, prior to the budgeting process the benchmarks are updated, based on the most current data for the portfolio.

Your analyst has prepared the attached excel file detailing the most recent data. Each tab on the file is a separate benchmark.

Your assignment

Using the attached excel file, create a benchmark using the average performance of the upper quartile on each of the benchmark tabs. Insert your benchmark into the assigned cell.

Steps:

Sort the data from best to worst.

Take the average of the best quartile (in this case, the top 5 hotels).

Enter this average of the best quartile performance into the given cell on each tab.

Summarize the benchmark on the first tab for all of the benchmarks.

Save the excel file using the name “yourname.xlsx” and submit using the assignment link.

RUBRIC

Excellent Quality95-100%

Introduction45-41 points

The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.

Literature Support91-84 points

The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.

Methodology58-53 points

Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.

Average Score50-85%

40-38 points

More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.

83-76 points

Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.

52-49 points

Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.

Poor Quality0-45%

37-1 points

The background and/or significance are missing. No search history information is provided.

75-1 points

Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.

48-1 points

There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met

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