2024 – Discussion 1 Capital Budgeting and Risk Analysis A Describe a capital budgeting project i e

Discussion 1:  Capital Budgeting and Risk Analysis

 

A. Describe a capital budgeting project (i.e., an investment in fixed assets) that might be undertaken by the company that you have selected for Assignment 1.  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 and MIRR.

 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 PR) mean?

 For this question, it is necessary to develop your own Excel spreadsheet; it needs to be submitted.

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B. From the scenario, suggest whether TFC should expand to the West Coast first.  Provide a rationale (reasons) for your response in which you cite at least two (2) capital budgeting techniques (e.g., NPV, IRR, MIRR, Payback Period, etc.) that caused you to arrive at your decision.