BUS 303 Business Finance Capital Budgeting Analysis Objective: Students demonstrate ability to 1. Utilize several capital budgeting concepts. 2. Complete required calculations. 3. Present oral recommendation to senior management based on resulting data. Scenario: D & H Enterprises is considering building a new plant overseas or expanding their product line. Cost will be $2,500 million for either option. Discount rate for both projects is 11%. Cash inflows for each options are below. Shown in millions: Year Option A: Build New $ 500 750 1200 2000 Option B: Expand Line $ 500 1500 3500 4000 4 Directions: Utilizing cell references and formulas, use the data in the Excel file provided to prepare A. Calculations - use the tabs provided for details of calculations - move final values to summary tab using cell references. 1. Payback period calculation. Textbook page 384 has example. You need to use Excel to make your calculations. 2. Net Present Value -utilize the NPV formula under the Formulas, Financials, tab. *See Table 12.4 in text page 386 for example. Assume 11% as discount rate. 3. Internal Rate of Return-utilize the IRR formulas under the Formulas, Financial, tab in Excel. *See Table 12.5 in text page 388 for example