There are 4 attachments to assist you with this assignment. Please use the scori

For This or a Similar Paper Click Here To Order Now

There are 4 attachments to assist you with this
assignment. Please use the scoring guide as this will avoid any revisions.
Thank you for your help.
In this assessment,
you will prepare an appropriate evaluation report to senior leadership using
sound research and data to defend your decision.
Report requirements:
Your report should follow
the corresponding MBA Academic and Professional Document Guidelines,
including single-spaced paragraphs.
Ensure written communication
is free of errors that detract from the overall message and quality.
Format your paper according
to APA style and formatting.
Use at least three scholarly
resources.
Length: Between 6-8 pages of
content beyond the title page, references, and any appendices.
Use 12 point, Times New
Roman.
Use capital budgeting tools to determine the
quality of three proposed investment projects, and prepare a 6-8 page report
that analyzes your computations and recommends the project that will bring the
most value to the company.
Introduction
This assessment is about one of the basic
functions of the finance manager, which is allocating capital to areas that
will increase shareholder value and add the most value to the company. This
means forecasting the projected cash flows of the projects and employing capital
budgeting metrics to determine which project, given the forecast cash flows,
gives the firm the best chance to maximize shareholder value. As a finance
professional, you are expected to:
Use capital budgeting tools
to compute future project cash flows and compare them to upfront costs.
Evaluate capital projects
and make appropriate decision recommendations.
Prepare reports and present
the evaluation in a way that finance and non-finance stakeholders can
understand.
Scenario
Senior leadership has now called upon you to
analyze three capital project requests based on forecasted cash flow as they
relate to maximizing shareholder value.
Your Role
You are one of Maria’s high-performing
financial analyst managers at ABC Healthcare Corporation and she trusts your
work and leadership. Senior leadership was impressed with your presentation in
Assessment 1 and they are tasking you with the analysis of these three proposed
capital projects based on forecasted cash flow. You have completed forecasting
the projected cash flows of the projects as reflected in the attached
spreadsheets, Projected Cash Flows [XLSX]. You now need to conduct your analysis
recommending which will provide the most shareholder value to the organization.
Requirements
Use capital budgeting tools
to compute future project cash flows and compare them to upfront costs.
Remember to only evaluate the incremental changes to cash flows.
Employing capital budgeting
metrics, determine which project, given the forecast cash flows, gives the
organization the best chance to maximize shareholder value.
Demonstrate knowledge of a
variety of capital budgeting tools including net present value (NPV),
internal rate of return (IRR), payback period, and profitability index
(PI). The analysis of the capital projects will need to be correctly
computed and the resulting decisions rational.
Evaluate capital projects
and make appropriate decision recommendations. Accurately compare the
indicated projects with correct computations of capital budgeting tools
and then make rational decisions based on the findings.
Select the best capital
project, based on data analysis and evaluation, that will add the most
value for the company. Provide a rationale for your recommendations based
on your financial analysis.
Prepare reports and present
the evaluation in a way that finance and non-finance stakeholders can
understand.
Project A: Major Equipment Purchase
A new major equipment
purchase, which will cost $10 million; however, it is projected to reduce
cost of sales by 5% per year for 8 years.
The equipment is projected to
be sold for salvage value estimated to be $500,000 at the end of year 8.
Being a relatively safe
investment, the required rate of return of the project is 8%.
The equipment will be
depreciated at a MACRS 7-year schedule.
Annual sales for year 1 are projected
at $20 million and should stay the same per year for 8 years.
Before this project, cost of
sales has been 60%.
The marginal corporate tax
rate is presumed to be 25%.
Project B: Expansion Into Three Additional
States
Expansion into three
additional states has a forecast to increase sales/revenues and cost of
sales by 10% per year for 5 years.
Annual sales for the
previous year were $20 million.
Start-up costs are projected
to be $7 million and an upfront needed investment in net working capital
of $1 million. The working capital amount will be recouped at the end of
year 5.
The marginal corporate tax
rate is presumed to be 25%.
Being a risky investment,
the required rate of return of the project is 12%.
Project C: Marketing/Advertising Campaign
A major new
marketing/advertising campaign, which will cost $2 million per year and
last 6 years.
It is forecast that the
campaign will increase sales/revenues and costs of sales by 15% per year.
Annual sales for the
previous year were $20 million.
The marginal corporate tax
rate is presumed to be 25%.
Being a moderate risk
investment, the required rate of return of the project is 10%.
Scoring
Guide Criteria
Criteria
1: Use capital
budgeting tools to compute future project cash flows and compare them to
upfront costs. Demonstrate knowledge of a variety of capital budgeting tools,
including net present value (NPV), internal rate of return (IRR), payback
period, and profitability index (PI).
You should: Applies capital
budgeting tools to compute future project cash flows and compares them to
upfront costs, providing a summary analysis. Demonstrates knowledge of a
variety of capital budgeting tools, including net present value (NPV), internal
rate of return (IRR), payback period, and profitability index (PI),
incorporating these concepts in the analysis.
Criteria 2: Evaluate the capital projects using data
analysis and applicable metrics that align to the business goals of maximizing
shareholder value. Accurately compare the indicated projects with correct
computations of capital budgeting tools and then make rational decisions based
on the findings.
You should: Evaluates
the capital projects using data analysis and applicable metrics that align to
the business goals of maximizing stakeholder value; adds potential
non-quantitative factors that could be incorporated into decision making;
provides details and examples. Accurately compares the indicated projects with
correct computations of capital budgeting tools and then makes rational
decisions based on the findings.
Criteria 3: Select the best capital project, based on data
analysis and evaluation, that will add the most value for the company. Provide
a rationale for your recommendations based on your financial analysis.
You should: Selects
the best capital project, based on data analysis and evaluation, that will add
the most value for the shareholder; supports selection with details and data.
Provides a rationale for the recommendations based on the financial analysis.
Criteria 4: Prepare an appropriate evaluation report for
senior leadership, using sound research and data to defend the decision.
Present the evaluation in a way that finance and non-finance stakeholders can
understand.
You should: Prepares an
appropriate evaluation report for senior leadership, using sound research and
data to defend the decision; justifies selection decision with a summary of
rationale and illustrates its impact on the firm; uses details and examples.
Presents the evaluation in a way that finance and non-finance stakeholders can
understand.
Competencies on which the assignment is graded:
Competency 1: Apply the theories,
models, and practices of finance to the financial management of an
organization.
Use capital budgeting tools
to compute future project cash flows and compare them to upfront costs.
Demonstrate knowledge of a variety of capital budgeting tools, including
net present value (NPV), internal rate of return (IRR), payback period,
and profitability index (PI).
Competency 2: Analyze financing
strategies to maximize stakeholder value.
Evaluate the capital
projects using data analysis and applicable metrics that align to the
business goals of maximizing shareholder value. Accurately compare the
indicated projects with correct computations of capital budgeting tools
and then make rational decisions based on the findings.
Competency 3: Apply financial analyses
to business planning and decision making.
Select the best capital
project, based on data analysis and evaluation, that will add the most
value for the company. Provide a rationale for your recommendations based
on your financial analysis.
Competency 5: Communicate financial
information with multiple stakeholders.
Prepare an appropriate
evaluation report for senior leadership, using sound research and data to
defend the decision. Present the evaluation in a way that finance and
non-finance stakeholders can understand.

For This or a Similar Paper Click Here To Order Now