UNIT 6: Capital Investment Appraisal

As the companys Financial Analyst, you have been tasked to attend a high-level tradeshow in Columbia. The purpose is to view and purchase two heavy duty machines to use in the production, bottling and packaging of the companys new line of soda pops. The projected net cashflows for two (2) machinery the company is considering investing in are as follows.

	Predicted Cash Flows
Years	Machine A: The Mega Star2022 $USD	Machine B: Turbo Mac2022 $USD
0	($25 million)	($20 million)
1
2
3
4
5
6
7
8
9
10

Required

1. Utilize capital investment appraisal techniques to determine which Machine should be pursued for the selected period based on the initial cost of $25 million and $20 million respectively, and a cost of capital of 10%.
2. Prepare a written report and PowerPoint presentation to the CEO of the company on the projects being considered.
3. Make recommendations for your choice and give your rationale.

Guiding topics of focus:

1. Provide an overview of the types of discounted and non-discounted capital appraisal techniques used to make capital budgeting decisions.
2. Justify the capital investment techniques to be used to assess the projects, giving advantages and disadvantages of each. .
3. Based on the results achieved from the investment techniques used make recommendations with justifications for your choice.