Discussion Assignment Unit 2
In the discussion forum, you are expected to participate often and engage in deep levels of discourse. Please post your initial response as early as possible and continue to participate throughout the unit. You are required to post an initial response to the question/issue presented in the Forum and then respond to at least 3 of your classmates’ initial posts. You should also respond to anyone who has responded to you.
Your Discussion should be a minimum of 250 words in length and not more than 450 words. Please include a word count. Following the APA standard, use references and in-text citations for the textbook and any other sources.
For this week’s Discussion:
· Discuss the impact of depreciation expense on the cash flow analysis of a capital project. Also, discuss the types of leasing arrangements and their pros and cons relating to depreciation expense.
Written Assignment Unit 2
Submit a written paper which is 2-3 pages in length, exclusive of the reference page. The Abstract is not required or needed. Papers should be double spaced in Times New Roman font which is no greater than 12 points in size. The paper should cite at least one source independent of the textbook.
In this paper, please discuss the following case study. In doing so, explain your approach to the problem, support your approach with references, and execute your approach. Provide an answer to the case study’s questions with a recommendation.
Case Study
You and your lifelong friend are partners together in the promotional materials business. That is, when marketing firms and their clients begin advertising or public relations campaigns, they come to your company to obtain the materials and products that would support the ad campaign. Examples of the materials and products you supply are printed posters, signs, T-shirts with printed logos, key chains, and other such items. You supply these items by procuring them from other sources or in some cases you manufacture them using various equipment in a warehouse you use near the center of the city. Your company’s name is WePROMOTE.
You and your business partner are planning the next major project for your company. The project is a significant step in the growth of your firm in that the project will generate cash inflows into the firm for many years into the future. However, there will be a large investment of funds required by the firm to launch the project. The planning is in its preliminary stages where the numbers and other data are gross estimates. Despite the “fuzzy numbers”, you and your partner still need to decide whether the project will be worth pursuing.
The following is some of the estimated data you have:
· You both decided to finance the project using your own funds.
· The cost of the equipment will be $80,000 and this cost is incurred prior to any cash is received by the project.
· The expected cash inflows are the most variable of the estimates. Your partner is convinced that the firm will receive $14,000 annually for 7 years. You have your doubts. You think it is more reasonable that there will be cash inflows of $14,000 in year 1, then inflows of $16,000 from years 2-4, and then inflows of $17,000 for years 5-7.
· You both agree that after 7 years, the equipment will stop working and can be sold for its parts for about $5,000.
· You both consider a discount rate of 7% but remain open to other future possibilities.
You trust your partner’s instincts and agree to start analyzing the feasibility of the project. The first step is to perform net present value (NPV) calculations for the project using your partner’s estimates and then using your estimates.
Requirements of the paper:
· Perform the two NPV calculations and provide a narrative of how you calculated both computations and why. Your answer must be justified.
· Present your calculated answers in schedule format (a table) along with your narrative. Microsoft Excel is also recommended for calculating and creating a table (your schedule).
· Then provide a summary conclusion on whether you should continue to pursue this business opportunity.
· Finally, assuming your partner remains unconvinced of your conclusion, present relevant points of your analysis that you believe are compelling and persuasive in supporting your position.
Superior papers will include:
· Accurate NPV calculations are provided
· A narrative that fully explains how NPVs were calculated and why is included
· A clear, logical summary and conclusion is given
This assignment will be assessed using the
BUS 5111 Unit 2 Written Assignment rubric.
Portfolio Activity Unit 2
1. This week we learned computations and the time value of money. Briefly explain the time value of money, its methods, and how it applies to NPV.
2. When computations are performed, it is important to justify your work by showing how the answer was determined via narrative, calculations, and formulas. Presentation is also very important and is a quality aspect in addition to utilizing a table to present data and answers.
· How do you feel you are doing as we close out this unit?
· Are you optimistic about your understanding of this week’s assignments?
The Portfolio entry should be a minimum of 250 words and not more than 750 words. Use APA citations and references if you use ideas from the readings or other sources.
This assignment will be assessed using the
Portfolio rubric.
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