custom writing services

Need more information?: Chat with us


support@myprivateresearcher.com

order download
Average score 4.96 out of 5 based on 673 opinions

Introduction to Capital Budgeting/Investment Valuation

Respond to the following scenario with your thoughts, ideas, and comments. Be substantive and clear, and use research to reinforce your ideas.

Part I

The Apix Printing Inc. board of directors has recently completed its multiyear strategic plan. The chief executive officer (CEO), John Matthews, and the vice president
(VP) of sales and administration, James Simeon, meet with you and Mary Francis to discuss it. Included in the plan is an intent to diversify Apix’s current product line
to include food packaging. Additional investment is required for this expansion, and equipment and inventory will need to be procured and placed in service.

As the VP of Finance, you will soon need certain information for computing the net present value (NPV) and the internal rate of return (IRR) for Apix’s expansion project.
The calculations will be presented to the board at the next quarterly meeting for approval. Today, you are meeting with CEO John Matthews and Luke Stewart, VP of
production and supply chain to discuss the information.

Luke is excited about the prospect of going into another line of business, and he says, “I know our employees will be eager to learn new processes if it means longterm
job security and profitability for the company.”

“Everyone will benefit if we are able to implement the project,” says John. “So, to gather enough capital, we must present an appealing prospectus to shareholders and
bondholders. Naturally, investors want some assurance that their investment will yield returns; and it’s up to us to properly assess our project given the cost of capital.”

You nod in agreement and say, “We need everyone in the organization to have an appreciation for these calculations and the information that goes into them. These
estimates are important because the board’s approval will allow the company to diversify into the food packaging business.”

Luke holds out both hands and says, “You know, my understanding is somewhat basic on the two theoretical approaches you’ve talked about. Let’s go over some of
the basics now so my grasp of the financial end of this is clearer.”

“Good idea, Luke,” you say. “I’ll prepare brief definitions of the project financial valuation methodologies NPV and IRR.”

You also need to explain the following to Luke:

• How the application of weighted average cost of capital (WACC) would be applied to each method
• How companies assess the feasibility of a project according to these valuation methodologies

“That would be a big help,” says Luke. “Thanks.”

“Once you get my explanations, you’ll be able to explain it to others,” you say.

Part II

Mary Francis has just returned to her office after attending preliminary discussions with investment bankers. Her last meeting regarding the intended capital structure of
Apix went well, and she calls you into her office to discuss the next steps.

“We will need to determine the required return for our intended project so that we have a decision criteria defined for the
project,” she says.

“Do you have the information I need to describe capital structure and to calculate the weighted average cost of capital (WACC)?” you ask.

“I do,” she smiles. “We can determine the target WACC for Apix Printing Inc., given these assumptions,” she says as she hands you a piece of paper that says the following:

Weights of 40% debt and 60% common equity (no preferred equity)

• A 35% tax rate

• Cost of debt is 8%

• Beta of the company is 1.5

• Risk-free rate is 2%

• Return on the market is 11%

“Great,” you say. “Thanks.”

“Be sure to indicate how these costs of capital might be used to determine the feasibility of the capital project,” Mary says. “I want your recommendation about which is more appropriate to apply to project evaluation, too. Let me know what you think.”

“One more thing,” she says as she stands up to signal the end of the meeting. “You did a good job with the explanations that you provided Luke the other day. Would you have time to define marginal cost of capital for me so I can include it in my discussions with investors? You seem to have a knack for making things accessible to nonfinancial folks.”
“No problem,” you say. “I’m glad my explanations are so useful!”
For this assignment, complete the following:

• Describe capital structure.
• Determine the WACC given the above assumptions.
• Indicate how these might be useful to determine the feasibility of the capital project.
• Recommend which is more appropriate to apply to project evaluation.
• Define marginal cost of capital.

Objectives:
• Compare and contrast alternative valuation methodologies and explain how a firm can maximize its value.
• Assess the cost of capital and marginal cost of capital and their implications for capital budgeting.

HOW IT WORKS

  simple order process Pricing order download You have just landed to the most confidential, trustful essay writing service to order the paper from. We have a dedicated team of professional writers who will assist you with any kind of assignment that you have. Your work is handled confidentially with a specific writer who ensures you are satisfied. Be assured of quality, unique and price friendly task delivered in good time when you place an order at our website. banner We have a team of dedicated writers with degrees from all spheres of study. We readily accept all types of essays and we assure you of content that will meet your expectations. Our staff can be reached  via live chat, email or by phone at any given time with prompt response.  

Prices starting at:

High school
Undergrad.(yrs 1-2)
Undergrad.(yrs 3-4)
Master’s
Doctoral
$10 / page
$10/ page
$12/ page
$15 / page
$17/ page

Note: The prices in the table above are applicable to orders completed within 14 days. Kindly see the full price table for more prices..

We urge you to provide as much information as possible to avoid many revisions. Set your deadline, choose your level, give payment information and relax while you track your work. We will deliver your paper on time. . 1 Are you in a quagmire and you are unable to complete your assignments? Do you doubt yourself on the quality of the essay you have written? Myprivateresearcher.com  is here to assist you. We will offer you unmatched quality that is plagiarism free. Place an order at myprivateresearcher.com  for guaranteed  high grades. order download

we offer gifts to our paper help customersPayment Methods

you can request our services and pay via paypal

we offer gifts to our paper help customersOur Guarantees

  1. Zero plagiarism.
  2. 100% confidentiality.
  3. FREE Reference page
  4. High Quality papers
  5. 24/7 Customer support

Our Testimonials Testimonials

I ordered a 7 page college essay and was delivered on time. Thank you guys I will definitely order again!

9.5
, FL

Our statisticsOur Statistics

  • Orders Completed todate 65387

  • Number of writers 246

  • Satisfied customers 98.7%

  • Returning customers 92.3%

  • Orders placed today 204