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1.Assess the relevant cash flows used in forming 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, and 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 showing cash flows, cost of capital and decision metrics (i.e., npv, irr and payback). Form a conclusion based upon the analysis. Begin with the example problem on age 405 and 406 of the textbook, Table 12.1. Modify the problem in the following fashion and 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 (3) 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 that are presented in the course and provide new thoughts and insights relating directly to this topic
Since the Fed has no direct influence over the bond market, explain why indirectly monetary policy can move the long bond.
2.using the information in the table below calculate the amount of the favorable price variance. budgeted actual volume
1.find the future value one year from now of a 7000 investment at a 3 annual compound interest rate. also calculate the
A research paper on a current insurance or risk management related topic must be completed during the semester. The paper should be approximately five to ten pages in length (double spaced) and include appropriate analysis and references
On August 1, 2006, Zambabwe changed the value of the Zim dollar from Z$101/U.S.$ to Z$250/U.S.$
Was it ethical to initially start the company showing a very minor profit so future profits would appear to be phenomenal growth?
todd receives a proposal to invest into a project which promises him 0 k at the end of the first year 100 k at the end
What are the primary economic indicators that you would use if you were thinking about making a large purchase and needed a loan? For example, you may consider a new house, car, or new capital for a business?
How many units will you have to sell to break even in the business? Calculate the breakeven point in units, and then in dollars and in order to make the business a worthwhile activity, you require a $20,000 profit. How many units would you have to..
United Technologies is not totally certain that salvage value will be this amount and wants to find out NPV without this amount in capital budgeting exercise. NPV would therefore be?
1. explain in your own words when and how the composition of capital the mix of debt and equity does not affect the
Which is most important to the business and why and what are the consequences a company may face if either of these is ignored?
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