This website uses cookies to ensure you have the best experience.

# Bus401 Paper

589 words - 3 pages

Caledonia
BUS401
Instructors Name
Date

Caledonia
Hello Mr. Morrison. After reviewing everything in the assignment for the new project and considering that we are in the 34 percent marginal tax bracket with a 15 percent required rate of return or cost of capital, I have put together the following answers to the questions that were included in my assignment. Please review the answers to the questions.
A. Should Caledonia focus on cash flows or accounting profits in making its capital-budgeting decisions? Should the company be interested in incremental cash flows, incremental profits, total free cash flows, or total profits?
Caledonia should definitely focus on cash flows. We want to make the most money we can and cash flows can be reinvested into the company to make more money.
B. ...view middle of the document...

Simply put, They do not affect the determination of cash flows. The costs have already occurred, regardless of the decision made about the investment. You can call these cost a trial and error cost because they will occur pre investment and usually are used to base a decision on if they want the project or not.
Answers to question D though J can be found calculated on the attached Excel Spreadsheet.
D. The projects initial outlay is \$8,100,000 . This is found by adding the Cost of the plant (\$7,900,000) + Shipping and installation costs (\$100,000) + Increase in working capital (\$100,000). The total is the projects initial outlay.
E. In order to find the differential cash flows over the projects life, you must calculate the change in EBIT, taxes, and depreciation and this will give you the numbers you need to calculate the operating cash flow. Once the operating cash flow is calculate, you can figure the net working capital and then finally calculate the free cash flow.
F. The terminal cash flow is \$5,980,000. This is the final number of free cash flow at the end of the project.
G. Please see my excel spreadsheet for the cash flow diagram for this project.
H. The net present value for this project is \$16,731,096. This was calculated in excel using the NPV formula and inputing a 15% required rate of return and using the 5 years free cash flow numbers. Then we have to add the initial cash outlay to come up with the NPV.
I. What is the internal rate of return.
Again, this was figure through my attached excel spreadsheet. The IRR is 77.02%
In excel, we only need to select the IRR function and input all 5 years totals of free cash flow numbers.
J. Should the project be accepted?
Yes the NPV is greater than 0 and the IRR is greater than the required rate of return.
K. There are three risks. There is the project standing alone risk, a contribution to firm risk and the systematic risk.

## Other Papers Like Bus401 Paper

### A Heart Of Darkness Essay

1748 words - 7 pages In this short story, there are frequent significant subject and ideas that make the story, "A Heart of Darkness," by Joseph Conrad, and haunting novel. The main theme is absolute white power over the natives. The theme validates the corruption, and the dependence caused by the white people as they took over the Congo. White men were giving all the power; they had no self-control, and in the end they did not use wisely. The white men became

### The Aspects Of Vulnerability Among The Exploited In Medical Research

2287 words - 10 pages Essentially, everyone is in some state of vulnerability. However, some of us are more susceptible to harm due to our vulnerabilities. The susceptible are the individuals with the greatest risk. These individuals risk the loss of their autonomy, and maybe even their lives. Vulnerable populations can be found in every subset of society. However, as previously mentioned, there are some vulnerable populations that are at an even greater risk than

### The Hitchhiker’S Guide To The Galaxy

1171 words - 5 pages The Hitchhiker’s Guide to the Galaxy As the human race makes life-changing discoveries, it is made apparent that there is always more to learn as the universe, instead of becoming familiar, is becoming absurd. The Hitchhiker’s Guide to the Galaxy, written by Douglas Adams, as well as the 2005 film adaption, portrays absurdity to be an all-encompassing system in the universe. Through the introduction and attempt to understand lack of reason, the

### The Ford Motor Company Wage Increase Of 1914 And The Theory Of Incentives And Efficiency Wages

1252 words - 6 pages doubling these wages can only be justified if, in some other way, it generates an equal or superior amount of value (either through a better product, lower costs, or both). According to the theory of incentives and efficiency wages, this is indeed the case, and Henry Ford even asserted that this decision was one of the best-cost cutting judgements they ever made (Raff and Summers 1987). This paper will outline the history of Ford Motor’s 1914

### Historical Analysis Of The Economical Breakthroughs Of The Industrial Revolution

1396 words - 6 pages A Historical Analysis of the Economical Breakthroughs of the Industrial Revolution During the Industrial Revolution, many elements of society experienced huge breakthroughs that would change the way they functioned forever. Economics were definitely one of them. With many new inventions and many factories appearing, many, many, more resources were being created than ever before. Also, all of the revenue from these resources was being given to

### Leadership Portrayed in Monologue from Shakespeare’s Henry V

1214 words - 5 pages Leadership is defined as a socially constructed process and which also affect organizational future outcomes. Leader is someone at high position who have overall duty for an organization, she or he decide what to do and the way how to achieve it. (Carter and Greer, 2013)The role of leader is extremely important for an organization, leader use their own power to influence the followers though many different ways such as motivation in order to

### Cuba Civil Rights

1906 words - 8 pages Picture a country that has limits on how much you can make random government imprisonments and more what do you do. That is the situation for the eleven million seventy-five thousand two hundred forty-four people of Cuba since the takeover of Fidel Castro. The US is opposed to Castro taking control of Cuba. Castro managed to ease the United States nerves when he said that Cuba was against all forms of communism. According to Lana Wylie the Union

### US Freight System

1273 words - 6 pages General Environment Each American requires the movement of approximately 40 tons of freight per year across the freight network. This includes everything from shirts to lawn mower to orange juice. • As the U.S. population expands, the U.S. freight system will be called upon to meet the demands of a larger population • Between 2010 and 2035, the system will experience a 22 percent increase in the total amount of tonnage it moves • By 2050, with

### Democratic Peace Theory

1852 words - 8 pages Intro: US Presidents have made it a goal during their term(s) in office to establish a good relationship with foreign countries and even try to improve upon existing connections with our allies. Some believe it is to prevent conflicts between the countries while others dispute that it is a threat assessment by the United States to pick and choose their friends and enemies. Preventing conflict between two democracies or countries that practice

### Booker T. Washington

1621 words - 7 pages “Success is to be measured not so much by the position that one has reached in life as by the obstacles which he has overcome” –Booker T. Washing. Booker Taliaferro Washington was born in Hale’s Ford, Virginia on April 5th, 1856 to Jane Burroughs and an unknown White man. Washington was married three times. His first wife was Fannie N. Smith from Malden, West Virginia. Booker and Fannie were married in the summer of 1882 and had one child

### Corn, Broccoli, Grass Or Balanced

2611 words - 11 pages About a century ago, there was not an epidemic of diet-related illness, a bizarre account of destroyed farmland, dead zones in our oceans created by chemical run-off spilling into the waterways, and there sure was not millions of people questioning the moral ethics of their diet. In the Omnivore’s Dilemma: A Natural History of Four Meals, the author Michael Pollan goes on a journey to investigate the sources of the nation’s food supply, for which

## Related Essays

### Freedom And Responsibility Essay

2141 words - 9 pages Built within the Constitution of the United States are specifically defined freedoms that are guaranteed to all citizens. Conversely, with every constitutional freedom there comes a corresponding responsibility. On September 25, 1789, the state legislature’s twelve proposed amendments were transmitted by congress, the first two dealing with congressional representation and congressional pay. The following numbers three through twelve were

### Hate Crime Laws Essay

2348 words - 10 pages On June 7, 1998, 49-year-old James Byrd Jr. of Texas accepted a ride from three white men, who then beat him severely, urinated on him, chained him by his ankles to the back of their pick-up truck, dragged him for three miles into the countryside, and dumped his corpse in front of an African-American cemetery (Graczyk). A little over a year later, a jury sentenced ring leader John King to death by lethal injection (“Man Executed for Dragging

### Rational Emotional Behavior Therapy Case Study Conceptualization And Treatment Plan

2140 words - 9 pages Rational Emotional Behavior Therapy Case Study of Sarah: A Conceptualization and Treatment Plan Rational emotive behavior therapy, REBT, was developed by Albert Ellis and holds the central belief that the events in our lives do not cause our disturbances but that they are instead caused by our view of the events (Murdock, 2009). Murdock (2009) states that “people are seen as responsible for their behavior” (p. 279) but, because they are

### Holidays In Albania Essay

1636 words - 7 pages Have you ever thought about having exciting and incredibly cheap vacations? Albania might be the right choice. According to My Travel Guide, Albania is ranked the fourth among ten places worth visiting in Eastern Europe (“Top 10 Eastern European Destinations”). One can encounter three kinds of vacations in this Mediterranean country: winter, summer, and cultural. The ideal places to spend your winter vacations are the Albanian Alps. They are