case study on business finance
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages To Order 5-10 Pages Description/Paper Instructions
Required 6-8 Pages
Please note this assignment comprises of two independent sections. The first portion presents the cash flows for two mutually exclusive projects and is not related to the second part. The second portion is a capital budgeting scenario.
Part 1
Please calculate the payback period, IRR, MIRR, NPV, and PI for the following two mutually exclusive projects. The required rate of return is 15 percent and the target payback is 4 years. Explain which project is preferable under each of the four capital budgeting methodologies stated above:
Table 1 Attached.
Part 2
Please study the following capital budgeting project and then provide explanations for the questions mentioned below:
You have been appointed as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of excellent zithers. The market for zithers is rising significantly. The corporation bought some land three years ago for $2.1 million in expectation of using it as a toxic waste dump site but has since contracted another company to handle all harmful materials. Based on a recent appraisal, the corporation believes it could sell the land for $2.3 million on an after-tax basis. In four years, the land might be sold for $2.4 million after taxes. The company also hired a marketing consultancy to investigate the zither market, at a cost of $125,000. An excerpt of the marketing report is as follows:
The zither industry will have a strong expansion in the next four years. With the brand name recognition that PUTZ brings to bear, we anticipate that the company will be able to sell 3,600, 4,300, 5,200, and 3,900 units per year for the following four years, correspondingly. Again, building on the name awareness of PUTZ, we consider that a premium price of $750 can be offered for each zither. Because zithers appear to be a fad, we feel after the end of the four-year period, sales should be discontinued. PUTZ predicts that fixed costs for the project will be $415,000 per year, while variable costs are 15 percent of sales. The equipment essential for production will cost $3.5 million and will be depreciated according to a three-year MACRS timetable. At the end of the project, the equipment can be scrapped for $350,000. Net working capital of $125,000 will be required immediately. PUTZ has a 38 percent tax rate, while the required rate of return on the project is 13 percent .
Now kindly offer full explanation for the following:
Explain how you determine the initial cash flows
Discuss the topic of sunk costs and identify the sunk cost in this project
Verify how you compute the annual operating cash flows
Explain how you determine the terminal cash flows at the conclusion of the project’s life
Calculate the NPV and IRR of the project and decide if the project is satisfactory
If the company that is implementing this project is a publicly traded company, explain and justify how this initiative will effect the market price of the company’s stock
Provide your explanations and definitions in detail and be exact. Comment on your results. Provide references for content as necessary. Provide your work in full and explain in your own words. Support your statements with peer-reviewed in-text citation(s) and reference(s) (s). All contributions require at least six (6) peer-reviewed references which should specify the source of the data.
RUBRIC
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. The can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. GET THIS PROJECT NOW BY CLICKING ON THIS LINK TO PLACE THE ORDER
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