FIN 3150 Financial Management Assignment

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Reference no: EM132404828

FIN 3150 Financial Management Assignment - Utah Valley University, USA

Case - Capital budgeting analysis

This case is for teams of two to four students. You may not do it alone without prior approval. Teams may not have more than four students. As much as possible, I will rely on you to select those you would like to work with. On Monday and Wednesday next week, we will take some time during class to identify teams that would like an additional member or students that are still looking for a team to work with.

Part 3 - Select the organizational form

6. Select an organizational form that is appropriate for the project. Discuss briefly the rationale for that organizational form, including the effect the form selected has on the value of the project.

Part 4 - Recommend a capital structure and type of funding

7. Select a capital structure for the project. Indicate the recommended funding mix of debt and equity for initial investment in the project and explain why the recommended capital structure is appropriate. With respect to debt selected, specify the recommended type of debt (interest only, amortized) and the maturity for the debt. Explain the rationale for the recommended type and maturity.

8. Determine the net present value of the leveraged project with the selected capital structure. Calculate the NPV using at least two of the following methods: weighted average cost of capital; adjusted present value; and/or flow to equity.

Part 5 - Additional project analysis

Conduct additional analysis of the project as follows:

9. Calculate three break-even points (other than the payback period and internal rate of return) that are useful for understanding the project. Discuss briefly each of these break-even points and the insight it provides.

10. Analyze an additional scenario for the project (i.e., in addition to the "expected" scenario already valued.)

11. Conduct a sensitivity analysis for the project. Determine the sensitivity of project NPV to changes in at least six assumptions, one of which must be from the initial investment, four must affect operating cash flows, and one must affect the discount rate. Discuss your findings about the relationship between the assumptions tested and project value.

12. Explain what variables (at least five) would be included if a conduct a Monte Carlo simulation were conducted for this project. For each variable, describe the characteristics of each random variable (e.g., if the variable is uniformly distributed, what should the high and low values be; if it is normally distributed, what should the mean and variance be or how could these be determined; should the values be limited to integers; and etc.)

The spreadsheet must be well organized, labeled accurately, and accessible.

A written document that:

(a) Briefly describes the project,

(b) Presents the important assumptions,

(d) Summarizes the cash flows and valuation results,

(e) Identifies the organizational for recommended for the projects and explains the rationale for selecting that organizational form,

(f) Indicates the capital structure recommended for the project and explains why that capital structure is appropriate for the project,

(g) Specifies the type of debt and maturity and explains the rationale for selecting that type of debt and maturity indicated,

(h) Indicates the value of the firm with the recommended capital structure, and

(i) Discusses the findings from the additional analysis and implications,

(j) Presents the team's recommendation whether the project should be accepted.

Note - Please leave all formula's active within the spreadsheet and complete sections 3-5. The Capital Budgeting Case Document is the financial numbers...in the word document, parts 3-5 need to be completed. This should include the calculations for NPV of the leveraged project using two methods from the list provided in section 4....part 5 (additional analysis) needs to be completed as well. When the NPV is calculated, please note which methods were selected, and leave the formulas intact on the spreadsheet for those calculations.

Attachment:- Financial Management Assignment Files.rar

Reference no: EM132404828

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Reviews

len2404828

11/21/2019 8:39:16 PM

Instructions: I have attached the first portion of my capital budgeting analysis project, as well as the instructions. Please leave all formula's active within the spreadsheet and complete sections 3-5. Please attach and include all backup data and supporting evidence. The Capital Budgeting Case Document is the financial numbers...in the word document, parts 3-5 need to be completed. This should include the calculations for NPV of the leveraged project using two methods from the list provided in section 4....part 5 (additional analysis) needs to be completed as well..focus can be on item # 11 & 12 please.

11/21/2019 8:39:07 PM

When the NPV is calculated, please note which methods were selected, and leave the formulas in tact on the spreadsheet for those calculations. (This is my 2nd time paying for this project, because someone changed everything to values only). The written submission specifically for the case is limited to ten pages. (That is a limit, not a goal.) You may include as many additional pages of exhibits and attachments as you like. These are not included in the 10 page limit. Each attachment or exhibit must be referenced in the main body of the text. The written discussion must be well-organized, accessible, and reviewed to eliminate errors. Tables or charts included in exhibits or appendices must be labeled for clarity.

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