There are four projects (Potential Jobs Z,Y,X, and Q) and you are tasks with analyzing to see if and in which order should we fund the projects. The project excel template (located in Module 6) is already prepared to calculate some of the elements including IRR and NPV; all you have to do is input the potential project information. Once you calculate each project, you will present a 2 page single-spaced written analysis justifying your positions presented as to ranking of each project, and as to acceptance/rejection with justifications as to why you accept or reject. The written analysis should utilize APA formatting or MLA. Sources should be properly APA or MLA sourced and the 2 page single-spaced count does not include the title page or references. The analysis should have the following headers: 1) an introduction, 2) facts, 3) outcome and 4) justification. Turnitin will be utilized to assess any plagiarism or other issues.
1) Introduction- This should be a professional introduction as if you are the finance or accountant presenting this presentation to the CEO and other executives for consideration. Your details should discuss the most relevant aspects of Capital Investment decision analysis. Be brief on this section. 1 paragraph/10% of points
2) Facts- this should be an explanation of the potential projects. You can make up what the projects are. For example, you can say Job Z is for a construction project or Job A is for an new investment in a Kitchen oven for our pizza franchise. It is limitless but should make logical sense. 1-2 Paragraph/10% of points
3) Outcome- This is the section where you provide the results of the analyzation into the model. You should not embellish here but be very factual as to the outcome of the potential jobs returns and feasibility. You should gleam all this from the template data that you inputted. 2-3 paragraphs/20% of points
4) Justifications- This is the meat… You now have to examine the outcome and use the NPV, payback, profitability index and other measures to make an informed analysis of which projects are acceptable and which logical order it should be in. Please note this is not guess work… There is a logical order and there is an acceptance or rejection of each based on the decision elements of time value of money and payback, IRR, ARR, PI, Payback Period(Recovery), etc… You have to use your newfound knowledge of chapter 26 and the details from the outcome to put a reasonable analyses together. 1 page /60% of points
Name (Potential Job): Job Z
Purchase Price: $149,000
Salvage Value: $0
Recovery Period (3,5,7,15,20 yrs): 15
Asset Life (2-20 yrs): 20
Expensing ($10,000 maximum): $7,000
Income Tax Rate: 22.00%
Percent Financed by Loan: 82.00%
Loan Interest Rate: 6.00%
Loan Length (years): 7
Opportunity Cost: 6.20%
Cash Income: $8,000
Cash Expenses: $1,600
Inflation Rate: 5.00%
Name (Potential Job): Job X
Purchase Price: $106,800
Salvage Value: $1,000
Recovery Period (3,5,7,15,20 yrs): 5
Asset Life (2-20 yrs): 20
Expensing ($10,000 maximum): $5,000
Income Tax Rate: 28.00%
Percent Financed by Loan: 66.00%
Loan Interest Rate: 7.00%
Loan Length (years): 5
Opportunity Cost: 5.00%
Cash Income: $18,000
Cash Expenses: $1,600
Inflation Rate: 3.00%
Name (Potential Job): Job Q
Purchase Price: $86,000
Salvage Value: $5,000
Recovery Period (3,5,7,15,20 yrs): 5
Asset Life (2-20 yrs): 15
Expensing ($10,000 maximum): $7,000
Income Tax Rate: 26.00%
Percent Financed by Loan: 75.00%
Loan Interest Rate: 10.00%
Loan Length (years): 6
Opportunity Cost:
5.50%
Cash Income: $8000
Cash Expenses: $1,600
Inflation Rate: 4.00%
Name (Potential Job): Job Y
Purchase Price: $99,000
Salvage Value: $2,000
Recovery Period (3,5,7,15,20 yrs): 7
Asset Life (2-20 yrs): 17
Expensing ($10,000 maximum): $10,000
Income Tax Rate: 28.00%
Percent Financed by Loan: 75.00%
Loan Interest Rate: 7.00%
Loan Length (years): 5
Opportunity Cost: 6.00%
Cash Income: $15000
Cash Expenses: $1,240
Inflation Rate: 3.00%