You are a staff accountant for Totally Chemical, a small organization that specializes in swimming pool chemicals. The vice president of operations indicated in a meeting last week that the organization is looking to expand into the trucking business so that Totally Chemical can increase its client base. The vice president has asked you to perform a capital budgeting analysis on the project and then email your findings.

The skills practiced in this activity will help to support you in your project.

Directions

Use the knowledge you gained from this module's resources to consider capital budgeting methods and how investment decisions can impact an organization. There are two parts to this activity.

Specifically, you must address the following rubric criteria:

Part One: Excel Calculations

For Part One, use the template in the What to Submit section to show your work in calculating the methods of capital budgeting.

Calculate the net present value $($NPV$)$ method of capital budgeting.

Calculate the internal rate of return $($IRR$)$ method of capital budgeting.

Calculate the payback period $($PP$)$ method of capital budgeting.

Part Two: Executive Summary Email

For Part Two, write an executive summary email in a separate Microsoft Word document that describes the data from the calculations you did in Part One.

Describe the impacts of using NPV and IRR versus PP and annual recurring revenue $($ARR$).$

Explain why the NPV and IRR are considered the time value of money methods.

Determine how capital budgeting helps the organization achieve its strategic objectives.

Determine whether to accept or reject the investment decision project based on the NPV$.$

What to Submit

Excel Calculations

Using the Module Six Activity Template, complete the Excel calculations in Part One of this activity.

Executive Summary Email

Complete the Part Two email in a separate $1-$page Word document with double spacing, $12-$point Times New Roman font, and one$-$inch margins. Sources should be cited according to APA style.

Totally Chemical is considering an investment decision project in which the organization expands into the trucking business. Totally Chemical wants to begin this investment decision project by buying one truck. In four years, the truck can be sold for $$25,000,$ with $$2,000$ of the working capital being returned. The discount rate is $8\%.$

Trucking Venture Specifics

$1$

Part One: Calculations

$2$ Net present value $($NPV$)$

B

$3[$Insert calculation$]$

$4$ Internal rate of return $($IRR$)$

$5[$Insert calculation$]$

$6$ Payback period $($PP$)$

$7[$Insert calculation$]$