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Description

Instructions

Evidence Statements: This assessment enables you to demonstrate your understanding of how capital budgeting techniques should be applied in practice and the consequences of poor capital allocation decisions. You will analyze actual corporate failures to identify where proper analysis might have prevented value destruction.

Presentation Requirements: Create a narrative PowerPoint presentation (5-7 slides) with voice-over slides to answer the following questions. Post your presentation in the discussion area as your initial response. For this, refer to this document on how to create narrated PowerPoint presentations.

Research and Analysis Components

Step 1: Project Selection and Research

Go to the internet and find a news article(s) published within the last year that discusses a capital project failure

Choose article(s) that contain some financial information on the project, such as:

Initial investment amounts

Cash flow projections or actual results

Liquidation values

Results of capital budget criteria estimations

Step 2: Financial Analysis and Presentation Content

Slide 1-2: Project Overview and Financial Details

Present key facts about the failed capital project including:

Company involved and nature of the investment

Initial investment amounts and projected returns

Actual outcomes and financial losses

Timeline of project development and failure

Slide 3-4: Capital Budgeting Analysis

Discuss what capital budgeting techniques the company likely used (or should have used)

Analyze whether proper application of NPV, IRR, payback period, or other techniques might have identified potential problems

Based on available information, evaluate the decision-making process

Slide 5-6: Cash Flow and Risk Assessment Issues

Identify specific problems with the company's cash flow estimation process

Consider whether the company properly estimated:

Initial outlays and hidden costs

Operating cash flows and revenue projections

Terminal values and asset recovery

Working capital requirements

Analyze whether adequate risk assessment was conducted

Slide 7: Recommendations and Reflection

Recommend specific improvements to the capital budgeting process

Reference capital budgeting techniques and methods learned in this unit

Include personal reflection on lessons learned and workplace applications

Initial Post Requirements

In each discussion, your initial post should explicitly meet the following four expectations:

1. Apply knowledge of appropriate topical content in a comprehensive and insightful way. In-depth analysis is present.
2. Offer unique, well-developed perspectives that deepen understanding of the concepts for others by using personal, relevant, real-world experiences and course or supplemental resources.
3. Justify your stance or analysis in response to the main discussion question.
4. Use correct financial/economic terminology consistently throughout your post.

Skills

This discussion develops your competency toward the following skills:

Capital Budgeting

Stock Valuation

Capital Structure

Financial Statements

In your initial post, demonstrate competency of the skill(s) assessed in this discussion, per the guidelines in the rubric.