Read the scenario below: and watch videos and look at spreadsheet to complete assignment!
You’re a member of the financial services department at Benson Regional Medical Center. The chief financial officer and chair of the capital budgeting committee, Dana Foster, has requested that you perform some capital analysis of two proposed patient service programs.
1. Start by downloading the
Week 8 Discussion Spreadsheet [XLSX]
.
2. Use the spreadsheet to find the information needed to complete a net present value (NPV), internal rate of return (IRR), and a
discounted payback period
for proposed Programs A and B.
3. Once you have completed the capital budgeting analyses, prepare a narrated PowerPoint presentation that provides:
1. A brief description of the proposed programs (A & B)*.
2. The cash flows projections for each option from Year 0 through Year 5.
3. The results and interpretation of the discounted payback period.
4. Net present value (NPV).
5. Internal rate of return (IRR).
6. In addition, you will be expected to state which program you would like to move forward to the full Capital Budgeting Committee for their consideration with supporting rationale. The presentation should be limited to 10 minutes. Submit the spreadsheet along with the slide deck.
*You get to create the program options descriptions.
Instructions:
Your initial post must have your presentation attached.
Provide constructive feedback to each of your response posts.
Resources
This video walks you through computing a discounted payback period for a proposed capital investment.
This video walks you through computing the net
present value (NPV) and internal rate of return (IRR)
using Microsoft Excel.
>Sheet %
10% Years Cash Flows 00.00
0 19,500.00
1 0.00
2 3 4 5 Discounted Payback Period Years Cash Flows Cash Flows discounted to today’s $ (PV) Years Cash Flows Cash Flows discounted to today’s $ (PV) Cumulative Discounted CFs 0 $0.00 $0.00 Net Present Value = Discounted Payback (YY/MM) = Week 8 video web links in case you are not able to open them from the homework network post. Video 1: https://youtu.be/423Wdr5SDPc Video 2: https://youtu.be/qAhV3xG0i8s
2
1
Benson Regional Medical Center: Capital Budgeting
Discount Rate =
1
0
WACC =
Program A
Program B
Years
Cash Flows
0
-$228,
5
-$
4
1
$16,715.00
$45,4
3
2
$83,070.24
$153,351.75
3
$172,620.29
$294,861.83
4
$137,957.29
$282,824.17
5
$92,975.49
$220,932.28
Project A
Discounted Payback Period
Project B
Cumulative Discounted CFs
0
-$228,500.00
$0.00
-$419,500.00
1 $16,715.00 $0.00 1
$45,430.00
2 $83,070.24 $0.00 2 $153,351.75 $0.00
3 $172,620.29 $0.00 3 $294,861.83 $0.00
4 $137,957.29 $0.00 4 $282,824.17 $0.00
5 $92,975.49 $0.00 5 $220,932.28 $0.00
Net Present Value =
Internal Rate of Return =
Internal Rate of Return =
Discounted Payback (YY/MM) =