$3.$

Capital Budgeting

Marissa Maestas needs YOU to develop $3$ Capital Budgeting illustrations $($NPV$,$ IRR, PI$)$ for a

project or machine for her fictitious business...which we probably can$$t remember what it is$...$I

certainly cannot as I$$m making up this exam, but anyway, professorial digression, LOL, LOL

Instructions:

$$ Come up with after tax cash flows for up to $5$ years with numbers in the millions for

each year.

$$ Your Cost of Capital is $8\%$

$$ Indicate based on NPV if the project is acceptable or not and why

$$ Compute IRR, PI

And yes, Marissa, you have to do this one too!

$4.$

$...$same goes for you, Alysia Murillo. Though #$4$ is all about you, $$you$$ got to do it$,$ too! LOL

Alysia has asked that you come up with...

$$ EPS $($she$$s publicly traded$)$

$$ Price$-$earnings $($she$$s publicly traded$)$

$$ Return on total assets $($same here$)$

$$ Return on common stockholders$$ equity $($well$,$ of course$)$

$....$from numbers you derive for her business $($make them up$).$ ALSO, MAKE SURE TO

EXPLAIN WHAT EACH RATIO MEANS. So though you are $$creating$$ numerical values,

they have to make sense, meaning you need to have some knowledge of $$what$$ goes

into the ratios above...I hope you do $$