The focus of the paper is the mini case, and the paper should beself-contained. A good example of the table organizing the materialfor the paper is Table 10-5. Figure 10-2 is a suitable example ofthe free cash flow diagram. You do not have to go overboard ongraphics for the cash flow diagram, but it and the calculations forthe free cash flows (like Table 10-5) must be in the paper (theWord file). I do not count words or pages, but my experience isthat it will take about 8 pages including the table and FCFdiagram. Remember that the final paper should be completelycontained within a Word document.
Lastly, your Final Paper (the Mini Case from Chapter 10, pages329-330, questions a through k, but please read the Ashfordinstructions as this is an APA style paper) is due on Monday, 5July. Please follow the instructions precisely with reference torounding and formatting, APA style (you do not need an abstract),plagiarism, and do not fret about the eight pages (remember that Iwant BOTH a Word document and the Excel file [and if you do not useExcel, then I want a supplementary paper depicting yourcalculations in detail — it is the only way that I can awardpartial credit, which you want me to do]). If you answer everyquestion (a to d, and e to k), dot every ‘i’ and cross every ‘t,’then you should be fine. I do want to see the cash flow diagram(question g) in the paper, but please do not go overboard ongraphics, and it does not need a separate page. I also expect tosee a table depicting your calculation of the free cash flowswithin the paper. If you find yourself at 12 pages, remind yourselfthat brevity is a virtue and revise it downward. Remember that thisis a paper, so you should not copy or repeat the questions, ratherthe paper should answer them, and it should be submitted in Word.In previous classes, I had a few students only give me an Excelfile, and they were rather disappointed with their grade.Everything should be within the paper, and the paper needs a titlepage, introduction, body, conclusion, and reference page.
Mini Case Study: BUS401 Principles of Finance
The text information is all that you need to reference. I losepoints if we reference Wikipedia, stay away from it as a source.Pay particular attention to Table 10-5 and figure 10-2, you need toduplicate both of them for the paper (do not worry about goingoverboard on the graphics for figure 10-2). I am sending this inanother attachment. This project is entirely in a WORD format, withbackup in an Excel document for partial credit if the figures areincorrect, but the instructor can see how we arrived at theinfo.
I guess the question is does my paper address all of therequirements accurately in parts “A through N” and does it have anacceptable summary conclussion? Does it make sense or is it just alot of non-sense? I think it kind of is just that.
. For parts “e” to “k,” use formulas to calculate the ratios andformat the cells to insert a comma if there is more than threenumbers. Round to the nearest whole number. Clearly label youranalysis and your conclusions in not more than 500 words.
It’s been 2 months since you took a position as an assistantfinancial analyst at Caledonia Products. Although your boss hasbeen pleased with your work, he is still a bit hesitant aboutunleashing you without supervision. Your next assignment involvesboth the calculation of the cash flows associated with a newinvestment under consideration and the evaluation of severalmutually exclusive projects. Given your lack of tenure atCaledonia, you have been asked not only to provide a recommendationbut also to respond to a number of questions aimed at judging yourunderstanding of the capital – budgeting process. The memorandumyou received outlining your assignment follows:
To: The Assistant Financial Analyst
From: Mr. V. Morrison, CEO Caledonia Products
Re: Cash Flow Analysis and Capital Rationing
We are considering the introduction of a new product. Currently weare in the 34 percent marginal tax bracket with a 15 percentrequired rate of return or cost of capital. This project isexpected to last 5 years and then, because this is somewhat of afad product, be terminated. The following information describes thenew project:
Cost of new plant and equipment $7,900,000
Shipping and installation Costs $ 100,000
Unit Sales
Year Units Sold
1 70,000
2 120,000
3 140,000
4 80,000
5 60,000
Sales price per unit $300/unit in years 1 through 4, $260/unit inyr 5
Variable cost per unit $180/unit
Annual Fixed Costs $200,000
Working –Capital Requirements There will be an initial workingcapital requirement
Of $100,000 just to get production started. For each
Year, the total investment in net working capital will be equal to10 percent of the dollar value of sales for that year. Thus, theinvestment in working capital will increase during years 1 through3, then decrease in year 4. Finally, all working capital isliquidated at the termination of the project at the end of year5.
The depreciation Method: Use the simplified straight line methodover 5 years.
Assume that the plant and equipment will have no salvage valueafter 5 years.
a. Should Caledonia focus on cash flows or accounting profits inmaking its capital budgeting decisions? Should the company beinterested in incremental cash flows, incremental profits, totalfree cash flows, or total profits?
b. How does depreciation affect free cash flows?
c. How do sunk costs affect the determination of cash flows?
d. What is the projects initial outlay?
e. What are the differential cash flows over the project’slife?
f. What is the terminal cash flow?
g. Draw a cash flow diagram for this project
h. What is its net present value?
i. What is its internal rate of return?
j. Should the project be accepted? Why or why not?
k. In capital budgeting, risk can be measured from threeperspectives. What are those three measures of a project’srisk?
l. According to the CAPM, which measurement of a projects risk isrelevant? What complications does reality introduce into the CAPMview of risk, and what does that mean for our view of the relevantmeasure of a project’s risk?
m. Explain how simulation works. What is the value in suing asimulation approach?
n. What is sensitivity analysis and what is its purpose?
ScholarMatic: Explanation & Answer
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