Use the company that was selected for the class assignments. This assignment involves development of an Excel-based

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Question:

Use the company that was selected for the class assignments. This assignment involves development of an Excel-based capital budgeting model and an analysis of a proposed capital budgeting project.

Prepare Capital Budgeting Model and Analysis

Describe a capital budgeting project (i.e., an investment in fixed assets) that might be undertaken by the company that you have selected. Make sure that the project has an initial investment in Year 0, followed by a series of annual cash flows for at least seven (7) years. In addition, determine the discount rate, or hurdle rate, that is appropriate for this project and explain the determination of that rate.

Develop your own Excel spreadsheet model that can be used to determine the Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Profitability Index (PI).

The Excel spreadsheet that you develop must use Excel’s automated financial functions for determining the NPV, IRR, MIRR, and PI.

Following the completion of the spreadsheet analysis, explain whether, or not, the project should be implemented? Also, discuss what the various indicators (i.e., NPV, IRR, MIRR and PI) mean?

For this assignment, it is necessary to develop your own Excel spreadsheet; it needs to be submitted.

The analysis needs to include:

1. Description of Proposed Capital Budgeting Project - Describe a capital budgeting project (i.e., an investment in fixed assets) that might be undertaken by the company that you have selected. Make sure that the project has an initial investment in Year 0, followed by a series of annual cash flows for at least seven (7) years. In addition, determine the discount rate, or hurdle rate, that is appropriate for this project and explain the determination of that rate.

2. Explanation of the Excel Capital Budgeting Model - Develop your own Excel spreadsheet model that can be used to determine the Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Profitability Index (PI). Explain how the model is constructed and the required inputs. Discuss the outputs of the model.

3. Explanation and Interpretation of Capital Budgeting Criteria - Prepare a written analysis of the results including NPV,IRR, MIRR, PI, and Profitability Analysis.

4. Recommendation About Implementation of Capital Budgeting Project – Develop and defend a recommendation about whether the proposed project should be implemented or not.