Capital Budgeting Worksheet Essay Example for Free

Capital Budgeting Worksheet EssayRead the scenarios below and select one to review and analyze. govern the ends appropriateness and economic viability. For all scenarios, assume spending occurs on the first day of each year and benefits or savings occurs on the last day. Assume the discount rate or weighted average cost of capital is 10%. Ignore taxes and depreciation.Proposal A New grinderA follow wants to build a brand-new factory for increased capacity. Using the net present value (NPV) order of capital budgeting, determine the proposals appropriateness and economic viability with the following informationBuilding a new factory provide increase capacity by 30%. The on-line(prenominal) capacity is $10 million of sales with a 5% profit margin.The factory costs $10 million to build.The new capacity will equip the companys needs for 10 years.The factory is worth $14 million over 10 years.Proposal B New EquipmentA company wants to buy a labor-saving piece of equipment. Usi ng the NPV method of capital budgeting, determine the proposals appropriateness and economic viability with the following informationLabor heart and soul is 12% of sales, which are annually $10 million.The new equipment will save 20% of labor annually.The new equipment will last 5 years.The new equipment will cost $200,000.Proposal C New Advertising ProgramA company wants to invest in a new advertising program. Using the NPV methodof capital budgeting, determine the proposals appropriateness and economic viability with the following informationThe new program will increase current sales, $10 million, by 20%.The new program will have a profit margin is 5% of sales.The new program will have a 3-year effect.The new program will cost the company $200,000 in the first year.