Capital budgeting report and analysis

Assignment Help Finance Basics
Reference no: EM131371760 , Length:

Outline

Sweet Dreams is a well-established and successful wine producer with its vineyard located in the Gold Coast hinterland. The vineyardhas 58 hectares of wine producing vines that, on average, produce5,000 kilograms of grapes per hectare per annum. Their modern processing facilities yield a total of approximately185,600 litres of wineeach year. All wine is sold in the year of harvest and Sweet Dreams achieves an average wholesale price of $5.00 per litre across their wine varieties.

After many years of operations, the winery's grape harvester needs to be replaced. The production manager has investigated several harvesters and has narrowed the choice to two specific models:a Self-Propelling Harvester and a Tow-Behind Harvester. Relative to the harvester being replaced, both these models are more efficient in that theyreduce crop wastageand have lowervariable costs.An initial analysis of the two harvesters conducted by the production manager indicates that the Tow-Behind Harvester should be purchased as its capital investment and overhaul costs are much lower than those for the Self-Propelling Harvester.

The vineyard's owner, Mr. Bob, is not satisfied with the analysis as he believes it is too simplistic. As such, he has provided you with some detailed information related to the decision to replace the harvester and has asked that you complete the following task.

Task

Provide a detailed financial analysis of both harvesters,noting that Mr. Bob plans to replace the chosen piece of machinery at the end of its life.In addition, you are to write a detailedbut concise report relating to the analysis and provide a recommendation on which harvester to purchase so that Mr.Bob can discuss this with the production manager.In completing this task, Mr. Bob has specifically requested the following:

- The financial analysis isto be completed in Excel. The file is to be easily adjustable for different scenarios(interactive spreadsheet) and you must use the ‘Analysis of Harvesters.xlsx' sheet provided as your input sheet.

- The analysis of each piece of machinery should be conducted on separate sheets.

- The reportis tobe short (600 words + 20% tolerance) and written in a manner that can be understood by a person with limitedknowledge of financial analytical tools.It should also have the following sections:

o Summary

o Methodology - this section must explain and justify the methodology chosen for the financial analysis. NOTE: Do not list/describe the steps of the analysis.

o Recommendations andLimitations.

Attachment:- Analysis of Harvesters.xlsx

Verified Expert

The assignment relates to capital budgeting concepts. The financial analysis has been done for self-propelling harvesting and tow behind harvesting. The calculations have been provided in the attached excel and the analysis is in the word file.

Reference no: EM131371760

Questions Cloud

What economic trends are to be observed : What economic trends are to be observed? Who will make money from the technology? Who is funding the research and development? Who controls the purse strings, and why?
Calculate the work done by the force : A particle moves from the origin to the point x=3m y=6m along the curve y=ax^2-bx, where a =2m^-1 and b=4. It's subject to a force cxyi+dj, where c =10N/m^2 and d=15N. Calculate the work done by the force.
Write for me methodology of service quality gap model : Write for me Methodology of Service quality- Gap model.- International Journal of Quality & Reliability Management.
Distance traveled to reach the box car : (a) How long does it take him to catch up to the empty box car? (b) What is the distance traveled to reach the box car?
Capital budgeting report and analysis : Capital Budgeting Report and Analysis - Discuss this with the production manager.In completing this task, Mr. Bob has specifically requested. The analysis of each piece of machinery should be conducted on separate sheets.
What it project did otis view as the critical piece : What was Bousbib's "stretch" goal in early 2002? What IT project did Otis view as the critical piece in attempting to achieve this goal?
Electric field at the test charge : A test charge is placed at distance of 2.5 x10-2 meters from a charge of 6.4 x10-5Coulombs. Whats is the electric field at the test charge? (k=9x109 Nxm2/C2)
What can be done to influence the relationship : BUS499- Some evidence suggests that there is a direct and positive relationship between a firm's size and its top-level managers' compensation. Recommend what can be done to influence the relationship so that it serves shareholders' interests.
Write a paper about your selected article : Write a paper about your selected article. Be sure to include the following in your paper:A discussion about the key variables in the selected article.Identify the validity and reliability reported statistics for the article.The particular threats to..

Reviews

inf1371760

2/1/2017 3:13:21 AM

This paper looks extraordinary! This is the reason I counsel the specialists. So far you are the best scholarly expert I have experienced, in spite of the fact that I have not done this that frequently. Thanks

inf1371760

2/1/2017 3:09:35 AM

You should not be calculating all DCF methods, as I said in the lecture, there is only one correct methodology that can be applied. - You must understand the theory and assumptions behind each methodology in order to be able to apply the correct evaluation method. Please review slides - as it correlates with the task. I have completed the task, however need clarification if I have done it correctly. Also, please focus on Marking Sheet, as I am aiming for the highest marks! Thank you for your assistance. 20725283_1EFB210 Finance 1 Lecture051 1.pptx 20725283_2EFB210 Finance 1 Lecture061 1.pptx Thank you for your quick response. I have attached the formatting guide. Could you please review the excel sheet and highlight the formulas used. This will help with my understanding, and I would be able to distinguish where I made errors/were correct. Thank you, once again. 20725248_1Finance 1 Excel Formatting for Assignment 1.docx

Write a Review

Finance Basics Questions & Answers

  Organization reward structure

Describe the relationship between type of reward structure employed by an organization for its employees and employee effectiveness and work productivity.

  Question about ratio analysis

Examine each company's financial performance for the two most recent years presented. Your analysis should include at least 8-from the following list, Quick ratio; Current ratio;

  What are some of the empirical findings on capital structure

What are some of the empirical findings on capital structure and how well does Modigliani and Miller theory predict them?

  What is the implied value of each warrant

Upstate Water Company just sold a bond with 80 warrants attached. The bonds have a 20-year maturity and an annual coupon of 12%, and they were issued at their $1,000 par value. Currently, the yield on similar straight bonds is 15%. What is the imp..

  What is the initial duration of the citrix fund

Consider the effect of a surprise increase in interest rates, such that the yields rise by 50 basis points (i.e., the yield curve is now flat at 6%). What would happen to the value of the assets in the Citrix Fund? What would happen to the value of t..

  Explain why maximization of shareholders

Explain why "maximization of shareholders' wealth" is the appropriate ultimate, long-term goal of the firm. Please find an article or video from www.forbes.com to validate your response.

  Sample size in sampling distribution

Given an error probability of 5 percent, what is the sample size in this sampling distribution?

  What is the addition to retained earnings

Lifeline, Inc., has sales of $586,000, costs of $272,000, depreciation expense of $70,500, interest expense of $37,500, and a tax rate of 40 percent. The firm paid out $36,500 in cash dividends.

  What is price at which firm needs to issue the new share

What is the price at which the firm needs to issue the new shares so that the existing shareholders capture the full benefit associated with the new project?

  What is the no-arbitrage price of security c

Suppose security C has a payoff of $600 when the economy is weak and $1800 when the economy is strong. The risk-free interest rate is 4%

  What effective annual interest rate will blenman end up

If the exchange rate remains at 5.10 pesos per dollar through the end of the loan period, what effective annual interest rate will Blenman end up paying on the loan?

  Find the sustainable growth rate

A Corporation's profit margin is 10% and its asset turnover ratio is .6. It has no debt, has net income of $10 per share.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd