make a recomendation supporting it with data.
1. Johnny Evaluator wants to know whether the project New San Juan has performed better or worse than project Ponce Cats. Mr. Evaluator wants to use a method that consider the cash flow. Johnny feels that if he does not produce a good report to the Board, they will not approve more investments any time soon. Evaluator has reviewed his corporate finance class notes on Net Present Value, IRR, and Payback period, but still is interested in determining how much cash the company has made on its investments. Johnny knowing you graduated from a prestigious university offers you a consulting position to help him with his presentation Required: Please complete Evaluator's assignment. Make a recommendation supporting it with data. Here is the relevant information you get from Mr. Evaluator: (in million) Total Assets Total Working Capital Cash Working Capital Capitalized Operating Leases Gross Fixed Assets Accumulated Depreciation Average Useful Life of Fixed Assets Years projects have been running Average Tax Rate Project $12.00 $3.50 $1.50 $2.35 $6.00 $2.40 10 yrs 4 yrs 25% Project B $10.00 $2.75 $1.00 $1.75 $4.50 $1.80 10 yrs 4 yrs 20% Additional information: Marginal Tax rate is 1.20 times the Average Tax Rate Depreciation Expense is 10% of Gross Assets Expected Salvage Value of Land 75% of Gross Investment Appreciation rate 10% per year Infation rate is 10% 1. Johnny Evaluator wants to know whether the project New San Juan has performed better or worse than project Ponce Cats. Mr. Evaluator wants to use a method that consider the cash flow. Johnny feels that if he does not produce a good report to the Board, they will not approve more investments any time soon. Evaluator has reviewed his corporate finance class notes on Net Present Value, IRR, and Payback period, but still is interested in determining how much cash the company has made on its investments. Johnny knowing you graduated from a prestigious university offers you a consulting position to help him with his presentation Required: Please complete Evaluator's assignment. Make a recommendation supporting it with data. Here is the relevant information you get from Mr. Evaluator: (in million) Total Assets Total Working Capital Cash Working Capital Capitalized Operating Leases Gross Fixed Assets Accumulated Depreciation Average Useful Life of Fixed Assets Years projects have been running Average Tax Rate Project $12.00 $3.50 $1.50 $2.35 $6.00 $2.40 10 yrs 4 yrs 25% Project B $10.00 $2.75 $1.00 $1.75 $4.50 $1.80 10 yrs 4 yrs 20% Additional information: Marginal Tax rate is 1.20 times the Average Tax Rate Depreciation Expense is 10% of Gross Assets Expected Salvage Value of Land 75% of Gross Investment Appreciation rate 10% per year Infation rate is 10%
