PLZ PLZ HELP

Strategy Execution

Analyze the following capital project options and provide recommendations as to which approach you would following on each.

Information:

Revenues = Estimated at $1,000,000 for the upcoming year and anticipated to grow by 5% per year with different marketing tactics will employ.

Expenses = $1,000,000 for the upcoming year and anticipated to decline to 95% of revenues each year thereafter as a result of the various cost efficiencies Struggle would put in place.

Questions:

1. XYZ is contemplating either the outright purchase today or a lease of a major piece of machinery and wants you to recommend which would be preferable - lease or buy. The following are the terms associated with each option:
   • Purchase Price Option = $1,000,000
   • Incremental Borrowing Rate = 5%
   • Estimated Life of Asset = 15 Years
   • Lease Payments = $90,000/year for 15 Years with $1 Purchase Option at end of lease.
2. How does the analysis in Question 1 change if the purchase option is $100,000 at the end of the lease as opposed to $1?
3. How does the analysis in Question 1 change if the incremental borrowing rate is 10%?
4. XYZ is considering purchasing Struggle Industries. For new acquisitions, XYZ has a internal required ROI for considering target acquisitions of 15% over 10 years. The following are some of the key financial information of XYZ. Determine what purchase price XYZ would be willing to consider for Struggle Industries given the following future estimated financial information for Struggle.
5. In Question 3 above, determine what the purchase price would change to if XYZ was able to reduce its overhead expenses by $100,000 per year as a result of acquiring Struggle?
6. In Question 3 above, determine how the results might change if Struggle was a foreign company and any earnings that were generated that XYZ would look to repatriate were subject to a 10% tax.
7. XYZ has a facility that requires HVAC expenses of $100,000/year. It can put in solar panels at a cost of $500,000 that will reduce this cost by $40,000/year. The solar panels should last for 25 years before they will need to be replaced. XYZ's incremental borrowing rate is 5%. Is this something you would recommend?
8. In Question 7, assume XYZ has an alternative use of the funding that would grow its operations. It would invest such in marketing costs that it believes would result in increased revenues of $50,000/year in three years (i.e. Years 4 through 25 would see the benefit) after the initial investment. Is this a better use of the funds that that provided in Question 7?
9. XYZ has an operation that currently generates $250,000 in profits. It believes it can build a new factory for $1,000,000 that will generate profits in the following stream over 10 years.
   • Years 1-3 = $0
   • Years 2-6 = $150,000/year
   • Years 7-10 = $200,000/year
     • It can borrow the money it needs for this investment at 5%. Is this something it should do?
10. How would your answer change if the money for this factory will be funded by an equity infusion and the new stockholders require a ROI for any new investments of 7%?

Specifications:

• Identify a company that currently has international/global operations. Will assume there are plans for expansion into a new region or country that the company is not already in.
• Give a brief introduction to your company, the product line, and identify at least two new potential countries you have chosen to investigate/analyze for expansion.
• Justify why you have chosen these regions/countries to focus your business expansion