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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
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
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