First calendar quarter to consider three projects

Assignment Help Management Theories

Reference no: EM131125356

Your company Portfolio Manager is convening a review board in the first calendar quarter to consider three projects. You have been asked to provide recommendations with respect to the capital budgeting aspects of these projects. Your recommendations will be considered by the review board along with other non-financial aspects of the projects. Initial (year 0) funding will be provided in the current year for the single project selected.

Project sponsors have provided the following estimated cash flow projections:

The company has not yet decided how the selected project will be financed. The cost of capital or hurdle rate will vary depending upon how the company decides to finance the project. You decide to compare projects in three areas: (1) payback period (not considering the cost of capital); NPV sensitivity (see note 1 below); and (3) Internal Rate of Return (IRR). Conduct each analysis and interpret the results.

You desire to make as complete a recommendation as possible so that the board understands the financial implications of whatever decision they make. Based on your analysis, what would you recommend to the review board and why? Your recommendation must be based on the combination of all three factors (payback period, IRR, and NPV sensitivity).

Show all calculations supporting your recommendation. Calculate NPV to the nearest dollar, IRR to three decimal places, and payback period to one decimal place.

Note 1: Project NPV varies inversely with the cost of funds to perform the project (expressed as the hurdle rate or kin the NPV discount factor formula). Some project NPVs are more sensitive to changes in k than others. See the NPV Profile discussion in Gallagher, Chapter 10, pages 278-279 (Reserved Readings) for information on determining NPV sensitivity.

Reference no: EM131125356

Questions Cloud

Draw an erd for the parrot palace information system : Draw an ERD for the Parrot Palace information system.

Worksheet uses a weighted-point evaluation system : The following worksheet uses a weighted-point evaluation system to calculate weighted performance scores along four dimensions for up to four potential sources. Re-create this spreadsheet in Microsoft Excel. Code your spreadsheet so that any chan..

Gallatin hardware is a small hardware store : Gallatin Hardware is a small hardware store in the rural township of Willow Creek that rarely extends credit to its customers in the form of an account receivable.

Write a c program that reads several different name : This union should itself contain two structures, one for baseball-related statistics and the other for football-related statistics. Test the program using a current set of league statistics. (Ideally, the program should be tested using both baseba..

First calendar quarter to consider three projects : Your company Portfolio Manager is convening a review board in the first calendar quarter to consider three projects. You have been asked to provide recommendations with respect to the capital budgeting aspects of these projects.

Discuss three major concerns of public budgeting : From the first e-Activity, discuss three major concerns of public budgeting and finance for a public administrator. Justify your response with examples.

How many different optimal subsets does the instance have : In general, how can we use the table generated by the dynamic programming algorithm to tell whether there is more than one optimal subset for the knapsack problem's instance?

In what section of the balance sheet should a note : In what section of the balance sheet should a note receivable be listed if its term is (a) 90 days, (b) six years?

Analyze the broad range of talent management efforts : Describe and analyze the broad range of talent management efforts that use software applications to help you Director to make an educated decision.

User Account

All Pages