Reference no: EM131954818
Question: Capital Budgeting Investment, Model, and Analysis - COMPANY IS AMAZON
Use the company that was selected for the class assignments. This assignment involves development of an Excel-based capital budgeting model and an analysis of a proposed capital budgeting project.
Prepare Capital Budgeting Model and Analysis
Describe a capital budgeting project (i.e., an investment in fixed assets) that might be undertaken by the company that you have selected. Make sure that the project has an initial investment in Year 0, followed by a series of annual cash flows for at least seven (7) years. In addition, determine the discount rate, or hurdle rate, that is appropriate for this project and explain the determination of that rate.
Develop your own Excel spreadsheet model that can be used to determine the Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Profitability Index (PI).
The Excel spreadsheet that you develop must use Excel's automated financial functions for determining the NPV, IRR, MIRR, and PI.
Following the completion of the spreadsheet analysis, explain whether, or not, the project should be implemented? Also, discuss what the various indicators (i.e., NPV, IRR, MIRR and PI) mean?
For this assignment, it is necessary to developyour ownExcel spreadsheet; it needs to be submitted.
The analysis needs to include:
1. Description of Proposed Capital Budgeting Project - Describe a capital budgeting project (i.e., an investment in fixed assets) that might be undertaken by the company that you have selected. Make sure that the project has an initial investment in Year 0, followed by a series of annual cash flows for at least seven (7) years. In addition, determine the discount rate, or hurdle rate, that is appropriate for this project and explain the determination of that rate.
2. Explanation of the Excel Capital Budgeting Model - Develop your own Excel spreadsheet model that can be used to determine the Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Profitability Index (PI). Explain how the model is constructed and the required inputs. Discuss the outputs of the model.
3. Explanation and Interpretation of Capital Budgeting Criteria - Prepare a written analysis of the results including NPV,IRR, MIRR, PI, and Profitability Analysis.
4. Recommendation About Implementation of Capital Budgeting Project - Develop and defend a recommendation about whether the proposed project should be implemented or not.
|
What is the equipment after-tax net salvage value
: The used equipment can be sold today for $5.75 million, and its tax rate is 35%. What is the equipment's after-tax net salvage value?
|
|
Complete the capital budgeting analysis
: Use the Excel template to complete the capital budgeting analysis. Your Excel analysis should clearly indicate the cash flow analysis timeline.
|
|
Compute the internal rate of return
: A capital project has an ititial investment of 225,000 and cash flows in years 1-6 of 80,000, 65,000, 50,000, 50,000, 35,000, and 60,000, respectively.
|
|
What impact does have on planning a cash flow budget
: Capital expenditures, expenditures which benefit the company for more than one year, are evaluated using capital budgeting techniques.
|
|
Describe a capital budgeting project
: Describe a capital budgeting project (i.e., an investment in fixed assets) that might be undertaken by the company that you have selected.
|
|
What is the total corporate value
: What is the total corporate value? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000.
|
|
What is the book value for a share of casper stock
: Caper Energy Exploration reports that corporation assets are valued at $191,036,000, its liabilities are $69,469,000, and it has issued 7,655,000.
|
|
What will be after-tax operating income
: What will be CWC's (a) after-tax operating income and (b) operating cash flow fro both this year (Year 1) and and three years from now (Year 3)?
|
|
What is the future value at a discount rate
: What is the future value at a discount rate of 23 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
|