Part I

Following the example of the operations management team, do the following:

1. Downloadthe Capital Budgeting spreadsheet, and compute the WACC for Genesis Energy.
2. Using the information provided in the spreadsheet, analyze Genesis Energy?s project options. Then, calculate the periodic and cumulative net cash flows for each potential project and its associated options. Please note that there are five projects (facility, equipment pieces 1, 2, and 3, and internal inspection), and that each project offers multiple-configuration options (facility size, equipment type, etc.).
3. Evaluate, rank, and recommend a specific option for each capital project according to beneficial value to the organization, using the evaluation tools NPV, payback, and IRR.
4. Construct and recommend between three and five metrics to measure the performance of the new operating strategy. At least one metric should reflect dividend policy as it relates to rewarding shareholders.
5. Prepare an executive summary describing your recommendations for each project and the overall cost, net cash flows, and expected returns of the operating configuration that you recommend. Be sure to justify your recommendations in terms of the investment criteria applied in Step 3 above. Be sure to report the full cost of the facility as it is configured per your recommendations. Present and justify your operating strategy performance metrics.

Genesis Energy WACC Item Amount ($000) % Total Accounts Payable Short-term Note Payable Total Current Liabilities 300,000 100,000 400,000 7.50% 2.50% Long-term Note Payable Mortgage Payable Total Liabilites 400,000 1,200,000 1,600,000 10.00% 30.00% Common Stock Equity Operating Equity Total Liabilities and Equity 1,500,000 500,000 4,000,000 37.50% 12.50% 100.00% Interest Weighted Rate Rate 8.00% WACC = ???