I’ve appreciated the FIN 515 JC penney.zip work (I sent you a message on your profile so that you can understand the assignment I am referring to) you have done by calculating the WACC.
Can you please help with the follow up capital budgeting analysis Week 7 Project 4 (attached)
IMPORTANT please use again J.C. Penney as the company
The parameters for this project are:
Your team will be using the same company for this project that you used in the Week 6 project. The company is now looking to expand its operations and wants you to do some analysis using key capital budgeting tools to do this. The parameters for this project are as follows.
The firm is looking to expand its operations by 10% of the firm’s net property, plant, and equipment. (Calculate this amount by taking 10% of the property, plant, and equipment figure that appears on the firm’s balance sheet.)
The estimated life of this new property, plant, and equipment will be 12 years. The salvage value of the equipment will be 5% of the property, plant and equipment’s cost.
The annual EBIT for this new project will be 18% of the project’s cost.
The company will use the straight-line method to depreciate this equipment. Also assume that there will be no increases in net working capital each year. Use the same marginal tax rate that you used in the Week 6 project.
The hurdle rate for this project will be the WACC that you calculated in Week 6.
Deliverable for this Project
Prepare a narrated PowerPoint presentation using VoiceThread or Webex that will highlight the following items.
- Your calculations for the amount of property, plant, and equipment and the annual depreciation for the project
- Your calculations that convert the project’s EBIT to free cash flow for the 12 years of the project.
- The following capital budgeting results for the project
- Net present value
- Internal rate of return
- Discounted payback period.
- Your discussion of the results that you calculated above, including a recommendation for acceptance or rejection of the project
Once again, you may embed your Excel spreadsheets into your document. Be sure to follow APA standards for this project.