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I need help finding out how to solve the following worksheets listed at the bottom with instructions please! The company you currently work for is
I need help finding out how to solve the following worksheets listed at the bottom with instructions please!
The company you currently work for is looking for guidance on several projects they are considering. You have been asked to review the following scenarios and offer your recommendations regarding how to proceed:
The following opportunities are being considered as part of their capital budget process NOTE: they can only choose one:
A new piece of equipment could increase output of their widgets by Currently they can create widgets per day, but forecasts show the possibility to sell more if they can increase their output. The cost of this piece of equipment is $ and it would allow for an annual increase in sales of $ with a gross profit margin of They anticipate the equipment could be used for years, and sold for $ at the end of its useful life. The equipment would be financed at interest.
A competing business is available for sale and can be acquired for $ This investment will add $ to the EBIT, growing by annually for years. After years, this business is anticipated to be worth $ and would be sold as part of a strategic business restructuring plan. The purchase price would be financed at interest.
The business currently has the following financial details available:
Gross sales of $
Gross profit margin
Fixed costs of $
Tax rate
Interest Expense included in fixed costs of $ without the above investments.
Annual sales is expected to increase by regardless of which capital project is chosen.
Submit an Excel workbook with the following worksheets:
Capital Budget calculations for both options.
year forecast based on the above information NOTE: do a separate forecast for each of the capital expenditure options
Summary worksheet
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