Question Details

(Solved by Expert Tutors) Important Notes:?The answer must meet all requirements.?I


?The answer must meet all requirements.
?I

will not accept a plagiarism or a copy of any student in any way.
?Quality is very important.
?Any statement must be supported with a clear source to know from where it was cited.
?You will get very good tip.
The question is :
Create an assessment to address the following problems/questions:
1.Assess the relevant cash flows used to form a capital budgeting decision model. For this assignment, focus upon an expansionary problem.
2.Evaluate the cost of capital (WACC) for use in a capital budgeting decision model. Make sure to define each component of the formula. Explain how the resulting cost of capital (WACC) is used within a capital budgeting model. How can the Capital Asset Pricing Model contribute to this analysis? Explain.
3.Weigh each of the following decision metrics that can be used within a capital budgeting decision model: net present value, internal rate of return, modified internal rate of return, payback period, and discounted payback period. Explain how each metric is formed and discuss the critical value of each in forming conclusions within a capital budgeting decision model. Discuss which method has the strongest basis for being used and under which conditions each might be the preferred method.
4.Develop a capital budgeting decision model that displays cash flows, cost of capital, and decision metrics (i.e., npv, irr, mirr, payback, and discounted payback). Then, form a conclusion based upon the analysis. What are some problems with the payback period? Is NPV better than IRR? Begin with the example problem on pages 405 and 406 of the textbook, Table 12.1. Modify the problem in the following manner, and then develop the analysis within an Excel spreadsheet.
?Assume the units sold are 2,700,000 in year 2013, and they grow each subsequent year at 5%.
?Assume each unit will sell for $2.10.
?Assume the variable cost of producing each unit is 1.10.
?Assume straight-line depreciation.
?The cost of capital is calculated based upon funding from retained earnings and from debt. The company is assumed to fund itself with 50% debt and 50% retained earnings. The cost of debt capital, rD, is 7%. The cost of capital from retained earnings, rS, is based upon the capital asset pricing model. The risk free rate in the market is 5% and the difference between the expected return on the market and the risk free rate is 5%. The beta for the company is 2.0. The tax rate is assumed to be 40%.
?Complete a sensitivity analysis in which you reevaluate the model considering the selling price per unit is 1.90, 2.00, 2.10, 2.20, and 2.30. Present and comment on the results.
?Assume all other assumptions as given.
Support your paper with at least three resources. In addition to these specified resources, other appropriate scholarly resources, including older articles, may be included. Your paper should demonstrate thoughtful consideration of the ideas and concepts presented in the course by providing new thoughts and insights relating directly to this topic.
Your response should reflect scholarly writing and current APA standards.
Length: 7 pages (not including title and reference pages)


 


Solution details:

Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
SiteLock

About this Question

STATUS

Answered

QUALITY

Approved

DATE ANSWERED

Apr 19, 2020

EXPERT

Tutor

ANSWER RATING

YES, THIS IS LEGAL

We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

  • As a reference for in-depth understanding of the subject.
  • As a source of ideas / reasoning for your own research (if properly referenced)
  • For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.

NEW ASSIGNMENT HELP?

Order New Solution. Quick Turnaround

Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN A DEADLINE.

Order Now