Question
Corporate Finance This assignment helps you develop the skills to master the following course competencies: Apply the theories, models, and practices of finance to the
Corporate Finance This assignment helps you develop the skills to master the following course competencies: Apply the theories, models, and practices of finance to the financial management of the firm. Integrate financial analyses into general business management planning and decision making. To review how all your activities help you achieve the competencies in the course, and ultimately, your overall program outcomes, revisit the MBA6016 Course Alignment Map. Activity Instruction To enhance your understanding of financial concepts, please complete the following problems in your Corporate Finance textbook: Chapter 2, problem 1 (page 35). Chapter 2, problem 2 (page 35). Chapter 2, problem 4 (page 35). Chapter 2, problem 5 (page 35). Chapter 3, problem 2 (page 75). Chapter 3, problem 6 (page 76). Assignment Submission You are required to use the textbook problems template in the Resources to complete the problems. This Excel document contains unique details and cells specific to the problems that you must use to derive your solutions. Where numeric solutions are expected, provide full detail of the process used to reach the solution using Excel. Where analysis is expected, use information from the textbook to inform your analysis, not replace it, incorporating creativity, critical thinking, and real-life perspectives. Cite all resource materials used in your analysis, using proper APA format. A thorough, professional presentation of your analysis and results is an important consideration. Enhance your presentation skills by using applicable tools such as tables, graphs, diagrams, and commentary as appropriate in all assignments in this course.
| UNIT 3: TEXTBOOK PROBLEMS | |||||
| CHAPTER 7: PROBLEM 1b | |||||
| Project A | Project B | ||||
| Discount Rate | 15% | 15% | |||
| Year 0 | ($14,500) | ($9,800) | |||
| Year 1 | $8,500 | $4,700 | |||
| Year 2 | $6,800 | $4,200 | |||
| Year 3 | $2,800 | $4,100 | |||
| NPV = | (Note: You will choose the project that has the highest NPV since it creates the most wealth.) | ||||
| CHAPTER 7: PROBLEM 2 | |||||
| Year | A. | B. | C. | ||
| 0 | $3,200 | $4,600 | $7,900 | ||
| 1 | $825 | $825 | $825 | ||
| 2 | $825 | $825 | $825 | ||
| 3 | $825 | $825 | $825 | ||
| 4 | $825 | $825 | $825 | ||
| 5 | $825 | $825 | $825 | ||
| 6 | $825 | $825 | $825 | ||
| 7 | $825 | $825 | $825 | ||
| 8 | $825 | $825 | $825 | ||
| Payback Period = | |||||
| CHAPTER 7: PROBLEM 8 | |||||
| Year | Project A | Project B | |||
| 0 | ($5,200) | ($3,600) | |||
| 1 | 1,800 | 1,300 | |||
| 2 | 3,200 | 2,100 | |||
| 3 | 2,200 | 1,800 | |||
| IRR = | |||||
| CHAPTER 7: PROBLEM 9 | |||||
| Discount Rate | 15% | ||||
| Year | |||||
| 0 (Initial Cost) | ($185,000) | $185,000 | |||
| 1 | 62,000 | ||||
| 2 | 62,000 | ||||
| 3 | 62,000 | ||||
| 4 | 62,000 | ||||
| 5 | 62,000 | ||||
| 6 | 62,000 | ||||
| 7 | 62,000 | ||||
| First find the NPV | (Use the built-in NPV formula in Excel but exclude using the Year 0 cash outflow.) | ||||
| Now calculate the Profitability Index | (Use the positive amount of the initial cost in cell C44 in the formula. You would only accept the project if the Profitability Index is above 1.) | ||||
| CHAPTER 8: PROBLEM 1 | |||||
| Cost of Souffle Maker | $27,000 | ($27,000) | |||
| Economic Life | 6 | years | |||
| # of Souffles produced per year | 2,300 | ||||
| Cost to make each Souffle | $2 | ||||
| Price of each Souffle | $7 | ||||
| Discount Rate | 14% | ||||
| Tax Rate | 34% | ||||
| Step 1: First calculate the Operating Cash Flow. | |||||
| Step 2: Place the answer you get for your Operating Cash Flow in the year 1 thru year 6 cells below. | |||||
| Year 1 | |||||
| Year 2 | |||||
| Year 3 | |||||
| Year 4 | |||||
| Year 5 | |||||
| Year 6 | |||||
| Step 3: Now find the NPV. Be sure to include the initial cost by using cell C58 as it is negative. | |||||
| NPV = | (You will accept the project if the NPV is positive.) | ||||
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