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Use capital budgeting tools to determine the quality of three proposed investment projects, and prepare a 6-8
page report that analyzes your computations and recommends the project that will bring the most value to the
This assessment is about one of the basic functions of the finance manager, which is allocating capital to areas
that will increase shareholder value and add the most value to the company. This means forecasting the
projected cash flows of the projects and employing capital budgeting metrics to determine which project, given
the forecast cash flows, gives the firm the best chance to maximize shareholder value. As a finance
professional, you are expected to:
Use capital budgeting tools to compute future project cash flows and compare them to upfront costs.
Evaluate capital projects and make appropriate decision recommendations.
Prepare reports and present the evaluation in a way that finance and non-finance stakeholders can
Senior leadership has now called upon you to analyze three capital project requests based on forecasted cash
flow as they relate to maximizing shareholder value.
Your Role
You are one of Maria’s high-performing financial analyst managers at ABC Healthcare Corporation and she
trusts your work and leadership. Senior leadership was impressed with your presentation in Assessment 1 and
they are tasking you with the analysis of these three proposed capital projects based on forecasted cash flow.
You have completed forecasting the projected cash flows of the projects as reflected in the attached
spreadsheets, Projected Cash Flows [XLSX]. You now need to conduct your analysis recommending which will
provide the most shareholder value to the organization.
Use capital budgeting tools to compute future project cash flows and compare them to upfront costs.
Remember to only evaluate the incremental changes to cash flows.
Employing capital budgeting metrics, determine which project, given the forecast cash flows, gives the
organization the best chance to maximize shareholder value.
Demonstrate knowledge of a variety of capital budgeting tools including net present value (NPV), internal rate
of return (IRR), payback period, and profitability index (PI). The analysis of the capital projects will need to be
correctly computed and the resulting decisions rational.
Evaluate capital projects and make appropriate decision recommendations. Accurately compare the indicated
projects with correct computations of capital budgeting tools and then make rational decisions based on the
Select the best capital project, based on data analysis and evaluation, that will add the most value for the
company. Provide a rationale for your recommendations based on your financial analysis.
Prepare reports and present the evaluation in a way that finance and non-finance stakeholders can
Project A: Major Equipment Purchase
A new major equipment purchase, which will cost $10 million; however, it is projected to reduce cost of sales
by 5% per year for 8 years.
The equipment is projected to be sold for salvage value estimated to be $500,000 at the end of year 8.
Being a relatively safe investment, the required rate of return of the project is 8%.
The equipment will be depreciated at a MACRS 7-year schedule.
Annual sales for year 1 are projected at $20 million and should stay the same per year for 8 years.
Before this project, cost of sales has been 60%.
The marginal corporate tax rate is presumed to be 25%.
Project B: Expansion Into Three Additional States
Expansion into three additional states has a forecast to increase sales/revenues and cost of sales by 10% per
year for 5 years.
Annual sales for the previous year were $20 million.
Start-up costs are projected to be $7 million and an upfront needed investment in net working capital of $1
million. The working capital amount will be recouped at the end of year 5.
The marginal corporate tax rate is presumed to be 25%.
Being a risky investment, the required rate of return of the project is 12%.
Project C: Marketing/Advertising Campaign
A major new marketing/advertising campaign, which will cost $2 million per year and last 6 years.
It is forecast that the campaign will increase sales/revenues and costs of sales by 15% per year.

Sample Answer

Compelling correspondence is essential to the achievement all things considered but since of the changing idea of the present working environments, successful correspondence turns out to be more troublesome, and because of the numerous impediments that will permit beneficiaries to acknowledge the plan of the sender It is restricted. Misguided judgments.In spite of the fact that correspondence inside the association is rarely completely open, numerous straightforward arrangements can be executed to advance the effect of these hindrances.

Concerning specific contextual analysis, two significant correspondence standards, correspondence channel determination and commotion are self-evident. This course presents the standards of correspondence, the act of general correspondence, and different speculations to all the more likely comprehend the correspondence exchanges experienced in regular daily existence. The standards and practices that you learn in this course give the premise to additionally learning and correspondence.

This course starts with an outline of the correspondence cycle, the method of reasoning and hypothesis. In resulting modules of the course, we will look at explicit use of relational connections in close to home and expert life. These incorporate relational correspondence, bunch correspondence and dynamic, authoritative correspondence in the work environment or relational correspondence. Rule of Business Communication In request to make correspondence viable, it is important to follow a few rules and standards. Seven of them are fundamental and applicable, and these are clear, finished, brief, obliging, right, thought to be, concrete. These standards are frequently called 7C for business correspondence. The subtleties of these correspondence standards are examined underneath: Politeness Principle: When conveying, we should build up a cordial relationship with every individual who sends data to us.

To be inviting and polite is indistinguishable, and politeness requires an insightful and amicable activity against others. Axioms are notable that gracious “pay of graciousness is the main thing to win everything”. Correspondence staff ought to consistently remember this. The accompanying standards may assist with improving courtesy:Preliminary considering correspondence with family All glad families have the mystery of progress. This achievement originates from a strong establishment of closeness and closeness. Indeed, through private correspondence these cozy family connections become all the more intently. Correspondence is the foundation of different affiliations, building solid partners of obedient devotion, improving family way of life, and assisting with accomplishing satisfaction (Gosche, p. 1). In any case, so as to keep up an amicable relationship, a few families experienced tumultuous encounters. Correspondence in the family is an intricate and alluring marvel. Correspondence between families isn’t restricted to single messages between families or verbal correspondence.

It is a unique cycle that oversees force, closeness and limits, cohesiveness and flexibility of route frameworks, and makes pictures, topics, stories, ceremonies, rules, jobs, making implications, making a feeling of family life An intelligent cycle that makes a model. This model has passed ages. Notwithstanding the view as a family and family automatic framework, one of the greatest exploration establishments in between family correspondence centers around a family correspondence model. Family correspondence model (FCP) hypothesis clarifies why families impart in their own specific manner dependent on one another ‘s psychological direction. Early FCP research established in media research is keen on how families handle broad communications data. Family correspondence was perceived as an exceptional scholastic exploration field by the National Communications Association in 1989. Family correspondence researchers were at first impacted by family research, social brain science, and relational hypothesis, before long built up the hypothesis and began research in a family framework zeroed in on a significant job. Until 2001, the primary issue of the Family Communication Research Journal, Family Communication Magazine, was given. Family correspondence is more than the field of correspondence analysts in the family. Examination on family correspondence is normally done by individuals in brain science, humanism, and family research, to give some examples models. However, as the popular family correspondence researcher Leslie Baxter stated, it is the focal point of this intelligent semantic creation measure making the grant of family correspondence special. In the field of in-home correspondence, correspondence is normally not founded on autonomous messages from one sender to one beneficiary, yet dependent on the dynamic interdependency of data shared among families It is conceptualized. The focal point of this methodology is on the shared trait of semantic development inside family frameworks. As such, producing doesn’t happen in vacuum, however it happens in a wide scope of ages and social exchange.

Standards are rules end up being followed when performing work to agree to a given objective. Hierarchical achievement relies significantly upon compelling correspondence. So as to successfully impart, it is important to follow a few standards and rules. Coming up next are rules to guarantee powerful correspondence: clearness: lucidity of data is a significant guideline of correspondence. For beneficiaries to know the message plainly, the messages ought to be sorted out in a basic language. To guarantee that beneficiaries can without much of a stretch comprehend the importance of the message, the sender needs to impart unmistakably and unhesitatingly so the beneficiary can plainly and unquestionably comprehend the data.>

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