BUS 550 Westcliff University Financial Management Worksheet

I need an explanation for this Business question to help me study.

Please note this CLA 1 assignment consists of two separate parts. The first part gives the cash flows for two mutually exclusive projects and is not related to the second part. The second part is a capital budgeting scenario.

Part 1

Please calculate the payback period, IRR, MIRR, NPV, and PI for the following two mutually exclusive projects. The required rate of return is 15% and the target payback is 4 years. Explain which project is preferable under each of the four capital budgeting methods mentioned above:

Table 1

Cash flows for two mutually exclusive projects

Year

Investment A

Investment B

0

-$5,000,000

-5,000,000

1

$1,500,000

$1,250,000

2

$1,500,000

$1,250,000

3

$1,500,000

$1,250,000

4

$1,500,000

$1,250,000

5

$1,500,000

$1,250,000

6

$1,500,000

$1,250,000

7

$2,000,000

$1,250,000

8

0

$1,600,000

Part 2

Please study the following capital budgeting project and then provide explanations for the questions outlined below:

You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $2.1 million in anticipation of using it as a toxic waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $2.3 million on an after-tax basis. In four years, the land could be sold for $2.4 million after taxes. The company also hired a marketing firm to analyze the zither market, at a cost of $125,000. An excerpt of the marketing report is as follows:

The zither industry will have a rapid expansion in the next four years. With the brand name recognition that PUTZ brings to bear, we feel that the company will be able to sell 3,600, 4,300, 5,200, and 3,900 units each year for the next four years, respectively. Again, capitalizing on the name recognition of PUTZ, we feel that a premium price of $750 can be charged for each zither. Because zithers appear to be a fad, we feel at the end of the four-year period, sales should be discontinued. PUTZ believes that fixed costs for the project will be $415,000 per year, and variable costs are 15 percent of sales. The equipment necessary for production will cost $3.5 million and will be depreciated according to a three-year MACRS schedule. At the end of the project, the equipment can be scrapped for $350,000. Net working capital of $125,000 will be required immediately. PUTZ has a 38% tax rate, and the required rate of return on the project is 13%.

Now please provide detailed explanation for the following:

  • Explain how you determine the initial cash flows
  • Discuss the notion of sunk costs and identify the sunk cost in this project
  • Verify how you determine the annual operating cash flows
  • Explain how you determine the terminal cash flows at the end of the project’s life
  • Calculate the NPV and IRR of the project and decide if the project is acceptable
  • If the company that is implementing this project is a publicly traded company, explain and justify how this project will impact the market price of the company’s stock

Provide your explanations and definitions in detail and be precise. Comment on your findings. Provide references for content when necessary. Provide your work in detail and explain in your own words. Support your statements with peer-reviewed in-text citation(s) and reference(s). All PA and CLA submissions require at least six (6) peer-reviewed references which should include the source of the data.

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with MyhomeworkGeeks
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Management
Thank you!!! I received my order in record timing.
Customer 452551, February 9th, 2021
Business and administrative studies
always perfect work and always completed early
Customer 452773, February 21st, 2023
Business and administrative studies
Thank you for your hard work
Customer 452773, October 19th, 2023
Business and administrative studies
excellent, got a 100
Customer 452773, May 17th, 2023
Human Resources Management (HRM)
excellent, great job
Customer 452773, June 19th, 2023
Sociology
THANK YOUUUUU
Customer 452591, March 18th, 2021
LEADERSHIP
excellent job
Customer 452773, August 12th, 2023
Leadership Studies
excellent job
Customer 452773, August 3rd, 2023
English 101
great summery in terms of the time given. it lacks a bit of clarity but otherwise perfect.
Customer 452747, June 9th, 2021
Leadership Studies
awesome work as always
Customer 452773, August 19th, 2023
Criminal Justice
The paper was not accused of plagiarism and was written very well. I will let you know the grade once it is graded. Thank you
Customer 452671, April 26th, 2021
10th grade English
very good
Customer 452773, March 26th, 2023
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat
Close

Sometimes it is hard to do all the work on your own

Let us help you get a good grade on your paper. Get professional help and free up your time for more important courses. Let us handle your;

  • Dissertations and Thesis
  • Essays
  • All Assignments

  • Research papers
  • Terms Papers
  • Online Classes
Live ChatWhatsApp