The Genesis Energy operations management team, nearing completion of its agreement with Sensible Essential Consulting, was asked by senior management to present a capital plan for the operating expansion. The capital plan was not to be a wish list but an analysis of the necessary expenditures to successfully establish a fully equipped operating facility overseas.

In addition, senior management requested meaningful financial and operating metrics to ensure that the performance objectives for the facility were being met. The operations management team was given five days to accomplish the following:

Calculate the firms WACC.

Prepare and analyze each planned capital expenditure.

Evaluate, rank, and recommend the capital expenditures according to beneficial value to the organization, using the evaluation tools NPV, payback, and IRR. Evaluation, ranking, and recommendations should be by category of expenditures. For example, facility, equipment 1, 2, and 3, and inspection.

Using the selected choices in part three, calculate the full cost of establishing a fully equipped facility. This would include the facility, equipment 1, 2, and 3, and inspection. In addition, calculate the payback, NPV, and IRR for the completed facility.

Construct and recommend between three and five metrics to measure the performance of the organization. At least one metric should be dividend decision-making driven.

Prepare an executive summary along with a separate document showing the calculations.

Part I

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

Download the Capital Budgeting spreadsheet(See to the buttom ), and compute the WACC for Genesis Energy.

Using the information provided in the spreadsheet, analyze Genesis Energys 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.).

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.

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.

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.

Your complete Microsoft Word report with Executive Summary should include all of your calculations as appendices

In addition to the summaries for each project, please provide a copy of the Excel Capital Budget showing the calculations for each of the projects.

The Capital Budgeting spreadsheet:

Genesis Energy WACC
Item	Amount ($000)	%	Interest	Weighted
		Total	Rate	Rate
Accounts Payable	300,000	7.50%	0%	0%
Short-term Note Payable	100,000	2.50%	8%	$8,000,000
Total Current Liabilities	400,000
Long-term Note Payable	400,000	10.00%	8%	$32,000.00
Mortgage Payable	1,200,000	30.00%	6%	$72,000.00
Total Liabilites	1,600,000
Common Stock Equity	1,500,000	37.50%	2%	$30,000.00
Operating Equity	500,000	12.50%		0%
Total Liabilities and Equity	4,000,000	100.00%		$142,000.00
Genesis Energy Captial Projects
	Initial Investment	Cash Flow	Cash Flow	Cash Flow	Cash flow	Cash Flow	Cashflow
		Y1	Y2	Y3	Y4	Y5	Y6-10
Project A: 25-emp facility	2000	-200	-300	-400	200	400	1000
Project B: 40-emp facility	2500	-200	-200	100	400	400	1500
Project C: 75-emp facility	3000	-300	-400	-100	600	700	2000
Equipment 1 - fully automatic	1500	-100	100	200	400	200	800
Equipment 1 - semi-automatic	1000	-50	-100	200	200	300	600
Equipment 1 - manual	750	150	150	150	150	150	750
Equipment 2 - Standard	800	-175	200	250	250	300	700
Equipment 2 - top of line	1500	-100	275	325	325	325	1500
Equipment 3 - 3-man machine	700	-200	-150	250	300	350
Equipment 3 - 2-man machine	600	-175	-100	175	175	175
Equipment 3 - 5-man machine	750	-300	-200	300	400	400
In-house inspection	1800	100	500	500	300	300	800
Contract inspection		200	200	200	100	100