Assignment: Capital Budgeting Investment, Model and Analysis
Capital Budgeting Investment, Model, and Analysis
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 years. In addition, determine the discount rate, or hurdle rate, that is appropriate for this project and explain the determination of that rate.
You may find some information about proposed capital budgeting projects in the Form 10K, news releases, or other company information sources. More than likely, it will be necessary to estimate the cash flows associated with the project.
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 and why? Also, discuss what the various indicators (i.e., NPV, IRR, MIRR and PI) mean?
For this assignment, it is necessary to design and develop your own Excel spreadsheet; it needs to be submitted. Beyond the traditional inputs, outputs, and assessment criteria, what new and interesting features can you incorporate into the model?
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 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.
Writing Instructions
The discussion portion of the analysis should be three to five pages in length, double spaced, and should employ APA style and format for reference citations. Supporting data (e.g., figures, tables, etc.) and references should be submitted limited to four separate attachments in an appendix after the written portion of the paper.
The paper should begin with a short introduction and then proceed to examine the four topics outlined in the previous section.
The subheadings used in the paper should be:
1. Introduction
2. Description of Proposed Capital Budgeting Project
3. Explanation of the Excel Capital Budgeting Model
4. Explanation and Interpretation of Capital Budgeting Criteria
5. Recommendation About Implementation of Capital Budgeting Project
Evaluation:
Completeness of analysis: The analysis must demonstrate a solid understanding of capital budgeting and the analysis of corporate investments. All assumptions used in preparing the projections for the project need to be thoroughly explained.
Organization: The paper should be well-organized and follow a logical pattern of analysis and discussion.
Presentation: Papers should meet professional business standards and meet APA formatting requirements.
Spelling, punctuation, and grammar: There should be few errors in grammar and punctuation. All sentences must be complete and well-structured.
Submission and Format:The completed paper is to be submitted to the "Gradebook" location designated for the assignment. The paper must be in Word format otherwise no credit is earned for the assignment. The Excel capital budgeting model is to be submitted.
The paper is also to be submitted to the Online Classroom. This will allow students to examine and discuss the various projects.
Attachment:- WMT_Eval.rar