FIN/711 v7 Capital Budgeting Problem Analysis Assignment
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FIN/711 v7 Capital Budgeting Problem Analysis Assignment
FIN/711 v7
Signature Assignment: Capital Budgeting Problem Analysis
FIN/711 v7
Page 2 of 2
Signature Assignment: Capital Budgeting Problem Analysis
Imagine that you just completed a course in Financial Management for Entrepreneurs where you learned various techniques and tools in financial analysis. Your uncle Ben wants your advice regarding an investment he is considering. Your uncle owns a furniture company that makes 2 types of furniture: custom-made furniture for consumers and standard furniture for furniture stores.
In the past few years, his sales in both these segments have shown a steady increase of 9% annually. He is considering buying 2 types of manufacturing equipment, 1 to make custom furniture and another to make standard furniture, to be able to supply furniture to both market segments. Each type of equipment requires capital in the range of $120,000. Such equipment is generally depreciated over a 5-year time frame.
Your uncle Ben has applied for a loan of $240,000 from a local bank, and he thinks he will get a loan. However, he is not confident that he will get the loan for the entire $240,000. Also, he is not certain of the interest rate. Based on his current financial obligations, he is confident the bank will loan him at least $120,000. Also, he thinks the interest rate could be in the range of 12% to 15%.
Let’s refer to the purchase of custom equipment as Project C and the purchase of standard equipment as Project S. The cash flows for these 2 equipment purchases are provided below:
Cash Flows in $(000)
Project Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Project C -120 35 55 90 75 85 Project S -120 82 75 65 45 30 Internal Rate of Return (IRR)
Project C IRRC = 40%
Project S IRRS = 50%
Net Present Value (NPV)
You have also been provided the following chart which shows the net present value of these 2 investment projects at different discount rates:
Project NPV Interest Project C $99.35 12.5% Project S $91.15 12.5% Write a 1,050- to 1,400-word analysis that addresses the following questions:
What is the relevance of capital budgeting in this situation?
What are some implications for using internal rate of return (IRR) versus net present value (NPV) for deciding on Project C and Project S?
What is the difference between independent and mutually exclusively projects? Are these projects, Project S and Project C, mutually exclusive projects? Explain why or why not and include rationale to support your response.
What would you recommend if your uncle Ben gets approval for only a $120,000 loan from the bank and why?
What would you recommend if your uncle Ben gets approval for a $240,000 loan from the bank and why?
You do not know what interest rate the bank would charge. In this situation, how would you use the chart given above? Explain.
How would you incorporate business risk in your analysis of these projects?
Cite any references you used to support your assignment. Format your assignment according to APA guidelines. Submit your assignment.
Research Experiences Handout for Psychology 1113
What is the Research Requirement for Psychology 1113?
Understanding the nature of research and how it is conducted is an essential part of learning about psychology. Students
in this course are required to obtain first-hand experience with research.
You may use one or more of the other methods of fulfilling the research requirement – reading/summarizing research
articles or attending/summarizing research presentations (also called colloquia).
Research Papers. A second means of fulfilling the Research requirement is to write a review of a research article. To earn research credit, you will select and read one article from the past 5 years from the journal Current Directions in Psychological Science and write a 500-word review of that article. Credit will be assigned based on
satisfactory completion of the 500-word review and the page length of the reviewed articles. Written reviews of
articles:
up to 6 pages in length will earn 1.0 credits;
such that each additional 3 article pages earns .25 research credits.
Your instructor will demonstrate in class how you can use the library databases to obtain free copies of articles from this academic journal. Your review should include: a statement of the topic investigated and a statement of
the hypotheses; a description of the procedure used to test the hypothesis; the most important results; the
researcher’s discussion of the results; any implications of these findings; and any limitations of the study. You
must provide a PDF copy of the article. Submit the review as an MS Word document and the copy of the article
to the Canvas dropbox for your section.
For colloquia, to earn 1 credit you must prepare and submit a 500 word summary of the colloquium as an MS Word document to the Canvas dropbox for your section. Your instructor will announce eligible
presentations/colloquia throughout the semester. (If you know of a colloquium that might be of interest, be sure to
bring it to the attention of your instructor.) Your summary should include the title of the presentation, the
speaker’s name, and the date and location in your paper.
Note that these reviews and summaries are writing assignments and all of the standard policies regarding academic
misconduct and plagiarism apply. All reviews and summaries will be submitted to TurnItIn.com, the anti-plagiarism
website has adopted. If you submit a review or summary that contains plagiarism of any sort, it will be considered a
violation of the University’s Academic Integrity policy. See the course syllabus for more information about academic
integrity violations.
NOTE please no plagiarism. I am female if that helps with your writing.
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 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 Score
50-85%
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 Quality
0-45%
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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FIN/711 v7 Capital Budgeting Problem Analysis Assignment