Here is the synopsis of our sample research paper on Capital Budgeting Decisions. Have the paper e-mailed to you 24/7/365.
Essay / Research Paper Abstract
A 6 page paper providing a variety of management accounting calculations, including WACC and NPV for several projects under consideration. Part 2 of the paper discusses issues raised by the CEO wanting to place a new site in his hometown. Rough assessment returns a negative NPV, but more thorough evaluation (additional years and adding disposal value at the end of the facility’s useful life) returns a positive NPV to legitimize acceptance of the project. Bibliography lists 5 sources.
Page Count:
6 pages (~225 words per page)
File: CC6_KSacctCapBudDe.rtf
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Unformatted sample text from the term paper:
stock, retained earnings, and new common stock New Debt. $2,700,000 for all projects * 12% interest = $324,000.
New Preferred Stock. $100/share - $5/share costs - $11/share dividend = $84/share proceeds. $2,700,000 for all projects ? $84 = 32,143 new shares needed.
New Common Stock. $2,700,000 for all projects * 10% flotation cost = $270,000. Retained Earnings.
Expected net income $1,714,286 x 70% = $1,200,000. (30% dividend payout). In the Discounted Cash Flow (DCF) approach, the discount rate is 14%, or 0.8772 for one year.
Thus the DCF approach yields $1,200,000 x 0.8772 = $1,052,640. In the Capital Asset Pricing Model (CAPM), the cost is determined using the CAPM equation:
Source: (Investment, Time and Present Value) For: x = 0.11
+ 1.51(.14 - 0.11) x = 0.11 + 0.2114 - 0.1661 x = 0.1553
x = 15.53% 1(b). Retained Earnings Break Point Equity = 60% = 0.6
Retained earnings = 1,714,286 x .6 = 1,028,571 Capital raised = RE ? 0.6 = 1,028,571 ? 0.6 = $1,714,286
1(c). WACC 1. {[(900000*.25)x.14] + [(900000*.15)x.14] + [(900000*.6)x.14)]} ? 900000 = (225000 x .14) +
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