{"id":13559,"date":"2020-11-24T09:06:19","date_gmt":"2020-11-24T09:06:19","guid":{"rendered":"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/investment-valuation-and-decision-making\/"},"modified":"2020-11-24T09:06:19","modified_gmt":"2020-11-24T09:06:19","slug":"investment-valuation-and-decision-making","status":"publish","type":"post","link":"https:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/investment-valuation-and-decision-making\/","title":{"rendered":"Investment Valuation and Decision Making"},"content":{"rendered":"<style type=\"text\/css\"><\/style><p><strong>ype:\u00a0<\/strong>Individual Project<\/p>\n<p><strong>Unit:\u00a0<\/strong>\u00a0Investment Valuation and Decision Making<\/p>\n<p><strong>Due Date:\u00a0<\/strong>\u00a0Wed, 8\/1\/18<\/p>\n<p><strong>Deliverable Length:\u00a0<\/strong>\u00a0Completed worksheet<\/p>\n<p>https:\/\/class.ctuonline.edu\/_layouts\/MUSEViewer\/MUSE.aspx?mid=11595800<\/p>\n<p>Respond to the following scenario with your thoughts, ideas, and comments. Be substantive and clear, and use research to reinforce your ideas.<\/p>\n<p>Over lunch, you and Mary meet to discuss next steps with the expansion project.<\/p>\n<blockquote><p>\u201cDo we have everything we need on sales and costs?\u201d you ask. \u201dIt must be time to compute the net present value (NPV) and internal rate of return (IRR) of the Apix expansion project.\u201d<br \/>\n\u201cWe have the data from James and Luke regarding projected sales and costs, respectively, for the food packaging project,\u201d says Mary. \u201cIt is feasible to project that we will receive a tax break from this implementation. I have information from our audit firm that indicates that future depreciation methods for taxes will be straight-line; however, the corporate rates will be reduced to 35% as we assumed in our weighted average cost of capital (WACC) calculation.\u201d<br \/>\n\u201cThat sounds good,\u201d you say.<br \/>\n\u201cRight,\u201d says Mary. \u201cYou can use a WACC of 10%\u00a0for the computation of the NPV and comparison for IRR.\u201d<br \/>\n\u201cI\u2019ve got the information I need from Luke and James,\u201d you say. \u201cDoes this look right to you? Here\u2019s what they gave me,\u201d you say, as you hand a sheet of paper to Mary.\u201cLet\u2019s look at this now while we\u2019re together,\u201d she says.<\/p><\/blockquote>\n<p>The information you hand to Mary shows the following:<\/p>\n<ul>\n<li>Initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal year<\/li>\n<li>Project and equipment life: 5 years<\/li>\n<li>Sales: $25 million per year for five years<\/li>\n<li>Assume gross margin of 60% (exclusive of depreciation)<\/li>\n<li>Depreciation: Straight-line for tax purposes<\/li>\n<li>Selling, general, and administrative expenses: 10% of sales<\/li>\n<li>Tax rate: 35%<\/li>\n<\/ul>\n<p>You continue your conversation.<\/p>\n<blockquote><p>\u201cIt looks good,\u201d says Mary. \u201cUse this information from Luke and James to compute the cash flows for the project.\u201d<br \/>\n\u201cNo problem,\u201d you say.<br \/>\n\u201cThen, compute NPV and IRR of the project using the\u00a0<a href=\"http:\/\/class.coloradotech.edu\/CbFileShareCommon\/ctu\/FINC615\/Assignment_Assets\/FINC615%20NPV-IRR_IP_4.xls\" target=\"_blank\" rel=\"nofollow noopener noreferrer\"><u>Excel spreadsheet<\/u><\/a>\u00a0I sent earlier today,\u201d says Mary. \u201cUse the IRR financial function for the computation of IRR.\u201d<br \/>\n\u201cOkay,\u201d you say. \u201cI\u2019ll submit my Excel file showing the computation of cash flows, NPV, and IRR by the end of week so you can look at it over the weekend.\u201d<br \/>\n\u201cThanks,\u201d says Mary.<\/p><\/blockquote>\n<p>Complete the above worksheet for this assignment.<\/p>\n<p><strong>Please submit your assignment.<\/strong><\/p>\n<p><strong>For assistance with your assignment, please use your text, Web resources, and all course materials.<\/strong><\/p>\n<p><strong>Senario:<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Apix Printing, Inc.<\/strong><\/p>\n<p>Apix Printing, Inc. is a private, domestic United States printer of periodicals, newspaper inserts, and advertising materials that accompany distributions of Sunday and weekday circulations of large metropolitan newspapers. The company, headed by chief executive officer (CEO) John Matthews, generates $450 million in revenues from three product lines (periodicals, inserts, and advertising) and has long-term contracts with several large U.S. retailers to produce weekly sales flyer inserts as well as metropolitan newspapers to produce Sunday magazine inserts and coupons. Its printing presses are characterized by offset print technology and are capable of high-capacity output; in addition, the company recently migrated to water-soluble inks, which considerably reduces manufacturing emissions.<\/p>\n<p>The company\u2019s executive team, employees, and above all, its vice president (VP) of Production, Luke Stewart, are committed to environmentally-sustainable manufacturing practices. Presently, the only substrate Apix uses is paper, specifically newsprint of various weights. Trim and waste are recycled in accordance with the company\u2019s sustainability commitment. Manufacturing divisions are geographically aligned with customers\u2019 locations to minimize logistics costs and response time to customer requirements; however, a centralized corporate entity administers functions such as human resources, information technology, and financial reporting. The VP of sales and administration, James Simeon, oversees administration and quality compliance among the various divisions. There are presently five manufacturing divisions: Northwest, Southwest, Northeast, Southeast, and Midwest.<\/p>\n<p>Currently, Apix is only marginally profitable, and as such, the chief financial officer (CFO), Mary Francis, has indicated that external financing will be required to support a company expansion into a new segment of the printing sector: food packaging. This endeavor will require new investments in equipment as well as substrate inventory; promotional costs will also increase. In addition, Timothy Russell, the new Audit Committee Chair, has pointed out that the company\u2019s compliance with the requirements of the Sarbanes-Oxley Act (SOX) will also cause administrative costs to increase. Following the requirements is paramount to successfully file a registration statement and to issue equity to shareholders in an initial public offering (IPO).<\/p>\n<p>As the newly hired VP of finance, you report to the CFO. In this capacity, your responsibilities include preparation of financial statements, comparative analysis and benchmarking to sector performance, and the assessment of new business investment opportunities to grow Apix\u2019s expansion endeavors in a challenging market.<\/p>\n<p><center><a href=\"http:\/\/onlineclassesguru.com\/orders\/ordernow\"><img decoding=\"async\" src=\"https:\/\/encrypted-tbn0.gstatic.com\/images?q=tbn:ANd9GcTyj99p60XCLyLk1htB7-1neRt8-2QdnenNlQ&usqp=CAU\"target=\"_http:\/\/onlineclassesguru.com\/orders\/ordernow\"\/><\/center><p>","protected":false},"excerpt":{"rendered":"<p>ype:\u00a0Individual Project Unit:\u00a0\u00a0Investment Valuation and Decision Making Due Date:\u00a0\u00a0Wed, 8\/1\/18 Deliverable Length:\u00a0\u00a0Completed worksheet https:\/\/class.ctuonline.edu\/_layouts\/MUSEViewer\/MUSE.aspx?mid=11595800 Respond to the following scenario with your thoughts, ideas, and comments. Be substantive and clear, and use research to reinforce your ideas. Over lunch, you and Mary meet to discuss next steps with the expansion project. \u201cDo we have everything we&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-13559","post","type-post","status-publish","format-standard","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v17.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Investment Valuation and Decision Making - onlineclassesguru<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/onlineclassesguru.com\/index.php\/2020\/11\/24\/investment-valuation-and-decision-making\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Investment Valuation and Decision Making - onlineclassesguru\" \/>\n<meta property=\"og:description\" content=\"ype:\u00a0Individual Project Unit:\u00a0\u00a0Investment Valuation and Decision Making Due Date:\u00a0\u00a0Wed, 8\/1\/18 Deliverable Length:\u00a0\u00a0Completed worksheet https:\/\/class.ctuonline.edu\/_layouts\/MUSEViewer\/MUSE.aspx?mid=11595800 Respond to the following scenario with your thoughts, ideas, and comments. 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