Description
Part 2
Based on the following information, calculate net present value (NPV), internal rate of return (IRR), and payback for the investment opportunity:
- EEC expects to save $500,000 per year for the next 10 years by purchasing the supplier.
- EEC’s cost of capital is 14%.
- EEC believes it can purchase the supplier for $2 million.
Answer the following:
- Based on your calculations, should EEC acquire the supplier? Why or why not?
- Which of the techniques (NPV, IRR, or payback period) is the most useful tool to use? Why?
- Which of the techniques (NPV, IRR, or payback period) is the least useful tool to use? Why?
- Would your answer be the same if EEC’s cost of capital were 25%? Why or why not?
- Would your answer be the same if EEC did not save $500,000 per year as anticipated?
- What would be the least amount of savings that would make this investment attractive to EEC?
- Given this scenario, what is the most EEC would be willing to pay for the supplier?
Prepare a memo to the President of EEC that details your findings and shows the effects if any of the following situations are true:
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.
Explanation & Answer
Review
Review
Anonymous
Very useful material for studying!
Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4
24/7 Homework Help
Stuck on a homework question? Our verified tutors can answer all questions, from basic math to advanced rocket science!
Most Popular Content
[Q&A] Business Questions
(Great English is a must!! No grammar errors!) (Paper with grammar errors or incoherent sentences won’t be accepted) ( ...
[Q&A] Business Questions
(Great English is a must!! No grammar errors!) (Paper with grammar errors or incoherent sentences won’t be accepted) (4 Questions, APA Format -------------------------------- Subject of the paper: Business Questions Requirement: I need from you to answering questions about business strategy , I attached the chapters that related to the assignment you should first go through the chapters then answer the questions .. Other information: No plagiarism, No grammar errors Format: APA FormatNo plagiarism is acceptedOnly academic resources should be used, no older than 5 years oldAdhere to the requested number of words/pagesNo Grammar errors ( refunds will be asked for incoherent/ full of grammar errors papers) *** The work will be checked for plagiarism through Turnitin by the professor. It is essential for everything to be free of plagiarism otherwise sanctions will be imposed*** -------- Thank you for your support
University of Kansas Ottawa Orientation Company Budget Excel Project
Professional Application #2BUDGET PROJECTOttawa Orientation CompanyThe Ottawa Orientation Company is a high-tech subsystem ...
University of Kansas Ottawa Orientation Company Budget Excel Project
Professional Application #2BUDGET PROJECTOttawa Orientation CompanyThe Ottawa Orientation Company is a high-tech subsystem production business that produces technology to enable driverless operation of automobiles and other vehicles. The design of Ottawa Orientation products are unique and represent a breakthrough in the industry. The units Ottawa Orientation produce claim to provide for greater dependability and safety. The company is completing its third year of operations and is preparing to create a master budget for next year, 2021. The budget will detail each quarter’s activities and the activity for the year in total. Through connections at the Rotary Club, the CEO was able obtain a template for use in creating a master budget and has provided it to you along with financial information from the corporate controller. Your job is to create the initial documents for the master budget:
sales budget
production budget
direct materials purchases budget
direct labor budget
overhead budget
selling and administrative expense budget
cash budget include a schedule of cash collections and payments
At that point you will present your results at the budget committee meeting before continuing to complete all of the documents needed. In particular, the CEO would like you to have determined whether the company is projected to have enough cash to purchase additional plant and equipment and to expand its operations to begin paying dividends each quarter. The CEO’s top priority is to purchase plant and equipment with a cost of $5,450,000 in the fourth quarter of 2021. Secondly, the CEO has been taking a salary from the company, but the other 9 shareholders haven’t received any return on their initial investment in the company yet and would like to achieve a regular 10% rate of return on their initial stock investment, although they realize that it may take a few more years to achieve that level.REQUIREDA. PreparationDownload the Budget Spreadsheet from D2L and enter your WIN on the INPUT worksheet, one number per column. This step sets up your unique assignment. You will also enter your recommendation for each quarter’s capital expenditures and dividends on the INPUT worksheet. Note that you are expected to consider various levels of capital expenditures and dividends before deciding on a recommendation, so enter preliminary amounts and adjust the figures when you are further along in the project. However, at the time you submit your project, the level of capital expenditures and dividends on the INPUT worksheet should match your recommendations.B. Understanding the CompanyCarefully browse the PROJECT INFORMATION worksheet for the data you need to create this year’s budgets for Ottawa Orientation Company. I suggest that you print out this worksheet with the column letters and row numbers to aid your creating and reviewing the budgets.Budget assumptions to use in preparing the budget are included on the PROJECT INFORMATION worksheet and are listed here:
The company policy is to keep a raw material inventory at 25% of the requirements for the next period’s production.
The company policy is to produce enough units of finished goods at the end of the month to ease its production in the next quarter based on its overall experience. The specific numbers are included on the Project Information worksheet, so this will NOT be computed within the budget.
The company policy is to allocate variable overhead to products based on direct labor hours.
For absorption reporting purposes, fixed overhead is allocated equally to each unit expected to be produced.
The company has a policy of writing off outstanding accounts receivable after 90 days. This is implemented in the budget by assuming that the projected uncollectible receivables are written off each quarter as a decrease in accounts receivable and a decrease in income as bad debt expense.
The company expects its historic trends in collections from customers, payments to raw material suppliers, and relationship of variable selling & administrative costs to continue.. Those percentages are included on the PROJECT INFORMATION worksheet.
All other cash distributions, except to raw material suppliers, are paid in the quarter of purchase or employee work.
The company policy is to maintain a minimum cash balance of $250,000 each quarter.
The treasury function of the company uses sophisticated investing techniques to earn the most it can on available cash. This is implemented in the budget by assuming that the company earns interest on the entire balance in cash at the end of each quarter for the entire quarter
The information about the values of assets, liabilities, and owners’ equity at the beginning of 2021 is on the 2019 balance sheet provided on the PROJECT INFORMATION worksheet. Your budget must take this information into consideration in creating the 2021 budget.
You do not have any information about the costs in 2019, other than those explicitly included on the PROJECT INFORMATION worksheet (and you won’t need them).
C. BudgetsCreate the following budgets / calculations on the appropriate worksheets:
sales budget
production budget
direct materials purchases budget
direct labor budget
overhead budget
selling and administrative expense budget
schedule of cash collections
schedule of cash payments
cash budget based on operations (see below for Discretionary Use of Cash segment)
NOTE: The additional tabs in the budget spreadsheet provided are for the second half of the project. Leave them blank in your submission for Professional Application #2.D. Review Review your budgets to be sure that your work is accurate and flexible. You must code cells with formulas and cell references only. You should also look for consistency and reasonableness throughout your budgets.Two ways to check your work are built into the spreadsheet.
Verify that the row calculations across the four quarters match the column calculations for the year as a whole in the last column. The light red boxes just outside each table help to provide this check.
NOTE: The EXCEL Template is already coded to put these figures on the Checkfigures worksheet.
The blue questions that appear on many spreadsheets check for common errors. Use these clues to go over your work and resolve any problems identified. The checks are not helpful until you have completed all of the cells in a table.
E. Decision-makingOnce you have completed the basic budgets, consider the CEO’s interests in growing the company and purchasing additional equipment and the CEO’s interests in providing returns to shareholders as dividends.1. Determine the level of capital expenditures and the timing of capital expenditures that you would recommend to Ottawa Orientation Company, taking into account both the CEO’s plans and your analysis of the forecasted budgets you create. Be sure to enter your recommendations on the CUSTOMIZATION worksheet.2. Determine the level of dividends and the timing of dividends that you would recommend to Inland Instrumentation Company, taking into account both the shareholders’ plans and your analysis of the forecasted budgets you create. Be sure to enter this recommendation on the CUSTOMIZATION worksheet.Complete the Discretionary Uses of Cash section of the Cash Budget based on cell references to the PROJECT INFORMATION worksheet. This will affect the ending cash balances for each quarter and for the year, of course, as well as changing the interest earned each quarter. NOTE: Your cash budget cannot have a negative cash balance in any quarter because that means your company is bankrupt and out of business. Adjust the capital expenditures and dividends so that you meet the company policy of minimum cash balance each quarter.Remember that each individual’s budget project numbers will vary in this assignment, so your budgets will not match those of other students, and you may make different recommendations for capital expenditures and dividends from others in the class.Summary of Spreadsheet GuidelinesYou should only input cell references and EXCEL mathematical operations and functions, as needed, to complete calculations. Do not retype any hard-coded numbers into cells. Do not copy and paste any information from one place to another. No actual numbers are allowed in any of the budget tabs of your solution other than true constants. For example, 4 is the number of quarters in a year, and you may want to use “4” in some formulas when adjusting from quarterly information to annual information. But 85% is the portion of purchases paid in the month of purchase, an estimate that could be changed at any time. You would never type or copy and paste the number 85%, but instead you would use a cell reference to the cell on the PROJECT INFORMATION worksheet that includes the percentage. The spreadsheet must be able to recalculate itself if new budget assumptions are made without changing any formulas. Evaluation of Professional Application #2 Input (5)Student’s WIN and recommendation for capital expenditures and dividends appear on the INPUT tab. Accuracy of Spreadsheet (75)The spreadsheet accurately produces budgets. (5) sales budget (8) production budget (7) direct materials purchases budget (5) direct labor budget (5) overhead budget (5) selling and administrative expense budget (10) schedule of cash collections (10) Schedule of cash payments (20) cash budget Flexibility of Spreadsheet (10)Data is entered only once and referenced thereafter. All calculations are completed using spreadsheet formulas.The spreadsheet created can be reused if there are changes in any of the elements in this analysis.
3 pages
Team Roles
The nine team roles are implementer, resource investigator, plant, monitor, shaper, coordinator, team worker, completer fi ...
Team Roles
The nine team roles are implementer, resource investigator, plant, monitor, shaper, coordinator, team worker, completer finisher and specialist. ...
Colorado Technical University Ethics for Cd Counseling Analysis PPT
Your manager tasks you with preparing a PowerPoint Presentation with a minimum of 15 slides (with presenters notes), not c ...
Colorado Technical University Ethics for Cd Counseling Analysis PPT
Your manager tasks you with preparing a PowerPoint Presentation with a minimum of 15 slides (with presenters notes), not counting the cover page or reference page. In this presentation, you are to utilize the library, the Internet, and any other available resources to make sure that the following topics are discussed:Discuss the importance of a chemical dependency counselor behaving ethically in interactions with clients. Consider the following:RelationshipsObligationsTrustClient welfareReputationWhat state laws or regulations involving standards of conduct, transmission, and storage of private health records exist?Professional codes of ethics contribute to maintaining ethical standards in a profession. Discuss professional codes in the counselor profession, such as the ACA code.Are there any national or regional professional organizations that promote ethical behavior in chemical dependency counseling profession?Describe the difference between behaving ethically and behaving legally, and give an example.What is the most serious legal consequence of the counselor behaving unethically, and what are the long-term effects of this consequence.The final slide in your presentation should be a reference page, detailing all of the resources you utilized in completing this presentation. Be sure to reference all of your sources in APA style format. 15 slides
5 pages
Module 2 Perfect Prints
Perfect prints will focus on a B2C (Business to consumer) model. This means that the t-shirts aim to have as their end-use ...
Module 2 Perfect Prints
Perfect prints will focus on a B2C (Business to consumer) model. This means that the t-shirts aim to have as their end-user the consumer and not other ...
Prepare a table with three columns
Classify the costs of this new product as direct materials, direct labor, manufacturing overhead, selling, or administrati ...
Prepare a table with three columns
Classify the costs of this new product as direct materials, direct labor, manufacturing overhead, selling, or administrative.Classify the costs listed as either product costs or period costs.List of expenses incurred by Everything Umbrella Inc.Cost of advertising the product.Fabric used to make the umbrellas.Maintenance of cutting machines used to cut the umbrella fabric so it will fit the umbrella frame.Wages of workers who assemble the product.President’s salary.The salary of the supervisor of the people who assemble the product.Wages of the product tester who stands in a shower to make sure the umbrellas do not leak.Cost of market research survey.Salary of the company’s sales managers.Depreciation of administrative office building.
Similar Content
BUS 322 Strayer University The Next 20 Years Presentation
Provide a title slide (as indicated in the format requirements below) followed by a slide with an introduction to your pre...
Two main types of fiduciary
What are the two main types of fiduciary duties owed by partners to one another and the partnership?...
Leadership and Strategy
Purpose of Assignment The purpose of this assignment is to increase learners' comprehension of leadership styles and the e...
BUS 499 Strayer Wk 6 Electronic Arts Acquiring Glu Mobile for $2.1 Billion Discussion
Please respond to the following:Using the Internet, research acquisitions that are currently underway and choose one of th...
Saudi Electronic University Chapter 4 Supply Chain Management Concepts Essay
the full requirements are in the file.Critical Thinking The purpose of this assignment is to identify and apply Logistics...
MQBS 3010 Melbourne Institute of Technology Managerial Accounting Course Essay
...
Attachment 1 20
Ben Potter is a 4-month-old male presented to the pediatrician's office for a routine well-child exam. Ben is accompanied ...
Finance Q3
Define each of the following: finished goods, work in process, and raw materials. Finished goods – These are goods which...
Take Home Exam 2020 4
This exam is to be completed ON YOUR OWN. You may use the lecture slides and the course textbook as resources; these are t...
Related Tags
Book Guides
Catch-22
by Joseph Heller
Steppenwolf
by Hermann Hesse
Calypso
by David Sedaris
The Calcutta Chromosome
by Amitav Ghosh
Faust
by Johann Wolfgang von Goethe
Moby Dick
by Herman Melville
Cry the Beloved Country
by Alan Paton
The Eyes Were Watching God
by Zora Neale Hurston
Crime and Punishment
by Fyodor Dostoyevsky
Get 24/7
Homework help
Our tutors provide high quality explanations & answers.
Post question
Most Popular Content
[Q&A] Business Questions
(Great English is a must!! No grammar errors!) (Paper with grammar errors or incoherent sentences won’t be accepted) ( ...
[Q&A] Business Questions
(Great English is a must!! No grammar errors!) (Paper with grammar errors or incoherent sentences won’t be accepted) (4 Questions, APA Format -------------------------------- Subject of the paper: Business Questions Requirement: I need from you to answering questions about business strategy , I attached the chapters that related to the assignment you should first go through the chapters then answer the questions .. Other information: No plagiarism, No grammar errors Format: APA FormatNo plagiarism is acceptedOnly academic resources should be used, no older than 5 years oldAdhere to the requested number of words/pagesNo Grammar errors ( refunds will be asked for incoherent/ full of grammar errors papers) *** The work will be checked for plagiarism through Turnitin by the professor. It is essential for everything to be free of plagiarism otherwise sanctions will be imposed*** -------- Thank you for your support
University of Kansas Ottawa Orientation Company Budget Excel Project
Professional Application #2BUDGET PROJECTOttawa Orientation CompanyThe Ottawa Orientation Company is a high-tech subsystem ...
University of Kansas Ottawa Orientation Company Budget Excel Project
Professional Application #2BUDGET PROJECTOttawa Orientation CompanyThe Ottawa Orientation Company is a high-tech subsystem production business that produces technology to enable driverless operation of automobiles and other vehicles. The design of Ottawa Orientation products are unique and represent a breakthrough in the industry. The units Ottawa Orientation produce claim to provide for greater dependability and safety. The company is completing its third year of operations and is preparing to create a master budget for next year, 2021. The budget will detail each quarter’s activities and the activity for the year in total. Through connections at the Rotary Club, the CEO was able obtain a template for use in creating a master budget and has provided it to you along with financial information from the corporate controller. Your job is to create the initial documents for the master budget:
sales budget
production budget
direct materials purchases budget
direct labor budget
overhead budget
selling and administrative expense budget
cash budget include a schedule of cash collections and payments
At that point you will present your results at the budget committee meeting before continuing to complete all of the documents needed. In particular, the CEO would like you to have determined whether the company is projected to have enough cash to purchase additional plant and equipment and to expand its operations to begin paying dividends each quarter. The CEO’s top priority is to purchase plant and equipment with a cost of $5,450,000 in the fourth quarter of 2021. Secondly, the CEO has been taking a salary from the company, but the other 9 shareholders haven’t received any return on their initial investment in the company yet and would like to achieve a regular 10% rate of return on their initial stock investment, although they realize that it may take a few more years to achieve that level.REQUIREDA. PreparationDownload the Budget Spreadsheet from D2L and enter your WIN on the INPUT worksheet, one number per column. This step sets up your unique assignment. You will also enter your recommendation for each quarter’s capital expenditures and dividends on the INPUT worksheet. Note that you are expected to consider various levels of capital expenditures and dividends before deciding on a recommendation, so enter preliminary amounts and adjust the figures when you are further along in the project. However, at the time you submit your project, the level of capital expenditures and dividends on the INPUT worksheet should match your recommendations.B. Understanding the CompanyCarefully browse the PROJECT INFORMATION worksheet for the data you need to create this year’s budgets for Ottawa Orientation Company. I suggest that you print out this worksheet with the column letters and row numbers to aid your creating and reviewing the budgets.Budget assumptions to use in preparing the budget are included on the PROJECT INFORMATION worksheet and are listed here:
The company policy is to keep a raw material inventory at 25% of the requirements for the next period’s production.
The company policy is to produce enough units of finished goods at the end of the month to ease its production in the next quarter based on its overall experience. The specific numbers are included on the Project Information worksheet, so this will NOT be computed within the budget.
The company policy is to allocate variable overhead to products based on direct labor hours.
For absorption reporting purposes, fixed overhead is allocated equally to each unit expected to be produced.
The company has a policy of writing off outstanding accounts receivable after 90 days. This is implemented in the budget by assuming that the projected uncollectible receivables are written off each quarter as a decrease in accounts receivable and a decrease in income as bad debt expense.
The company expects its historic trends in collections from customers, payments to raw material suppliers, and relationship of variable selling & administrative costs to continue.. Those percentages are included on the PROJECT INFORMATION worksheet.
All other cash distributions, except to raw material suppliers, are paid in the quarter of purchase or employee work.
The company policy is to maintain a minimum cash balance of $250,000 each quarter.
The treasury function of the company uses sophisticated investing techniques to earn the most it can on available cash. This is implemented in the budget by assuming that the company earns interest on the entire balance in cash at the end of each quarter for the entire quarter
The information about the values of assets, liabilities, and owners’ equity at the beginning of 2021 is on the 2019 balance sheet provided on the PROJECT INFORMATION worksheet. Your budget must take this information into consideration in creating the 2021 budget.
You do not have any information about the costs in 2019, other than those explicitly included on the PROJECT INFORMATION worksheet (and you won’t need them).
C. BudgetsCreate the following budgets / calculations on the appropriate worksheets:
sales budget
production budget
direct materials purchases budget
direct labor budget
overhead budget
selling and administrative expense budget
schedule of cash collections
schedule of cash payments
cash budget based on operations (see below for Discretionary Use of Cash segment)
NOTE: The additional tabs in the budget spreadsheet provided are for the second half of the project. Leave them blank in your submission for Professional Application #2.D. Review Review your budgets to be sure that your work is accurate and flexible. You must code cells with formulas and cell references only. You should also look for consistency and reasonableness throughout your budgets.Two ways to check your work are built into the spreadsheet.
Verify that the row calculations across the four quarters match the column calculations for the year as a whole in the last column. The light red boxes just outside each table help to provide this check.
NOTE: The EXCEL Template is already coded to put these figures on the Checkfigures worksheet.
The blue questions that appear on many spreadsheets check for common errors. Use these clues to go over your work and resolve any problems identified. The checks are not helpful until you have completed all of the cells in a table.
E. Decision-makingOnce you have completed the basic budgets, consider the CEO’s interests in growing the company and purchasing additional equipment and the CEO’s interests in providing returns to shareholders as dividends.1. Determine the level of capital expenditures and the timing of capital expenditures that you would recommend to Ottawa Orientation Company, taking into account both the CEO’s plans and your analysis of the forecasted budgets you create. Be sure to enter your recommendations on the CUSTOMIZATION worksheet.2. Determine the level of dividends and the timing of dividends that you would recommend to Inland Instrumentation Company, taking into account both the shareholders’ plans and your analysis of the forecasted budgets you create. Be sure to enter this recommendation on the CUSTOMIZATION worksheet.Complete the Discretionary Uses of Cash section of the Cash Budget based on cell references to the PROJECT INFORMATION worksheet. This will affect the ending cash balances for each quarter and for the year, of course, as well as changing the interest earned each quarter. NOTE: Your cash budget cannot have a negative cash balance in any quarter because that means your company is bankrupt and out of business. Adjust the capital expenditures and dividends so that you meet the company policy of minimum cash balance each quarter.Remember that each individual’s budget project numbers will vary in this assignment, so your budgets will not match those of other students, and you may make different recommendations for capital expenditures and dividends from others in the class.Summary of Spreadsheet GuidelinesYou should only input cell references and EXCEL mathematical operations and functions, as needed, to complete calculations. Do not retype any hard-coded numbers into cells. Do not copy and paste any information from one place to another. No actual numbers are allowed in any of the budget tabs of your solution other than true constants. For example, 4 is the number of quarters in a year, and you may want to use “4” in some formulas when adjusting from quarterly information to annual information. But 85% is the portion of purchases paid in the month of purchase, an estimate that could be changed at any time. You would never type or copy and paste the number 85%, but instead you would use a cell reference to the cell on the PROJECT INFORMATION worksheet that includes the percentage. The spreadsheet must be able to recalculate itself if new budget assumptions are made without changing any formulas. Evaluation of Professional Application #2 Input (5)Student’s WIN and recommendation for capital expenditures and dividends appear on the INPUT tab. Accuracy of Spreadsheet (75)The spreadsheet accurately produces budgets. (5) sales budget (8) production budget (7) direct materials purchases budget (5) direct labor budget (5) overhead budget (5) selling and administrative expense budget (10) schedule of cash collections (10) Schedule of cash payments (20) cash budget Flexibility of Spreadsheet (10)Data is entered only once and referenced thereafter. All calculations are completed using spreadsheet formulas.The spreadsheet created can be reused if there are changes in any of the elements in this analysis.
3 pages
Team Roles
The nine team roles are implementer, resource investigator, plant, monitor, shaper, coordinator, team worker, completer fi ...
Team Roles
The nine team roles are implementer, resource investigator, plant, monitor, shaper, coordinator, team worker, completer finisher and specialist. ...
Colorado Technical University Ethics for Cd Counseling Analysis PPT
Your manager tasks you with preparing a PowerPoint Presentation with a minimum of 15 slides (with presenters notes), not c ...
Colorado Technical University Ethics for Cd Counseling Analysis PPT
Your manager tasks you with preparing a PowerPoint Presentation with a minimum of 15 slides (with presenters notes), not counting the cover page or reference page. In this presentation, you are to utilize the library, the Internet, and any other available resources to make sure that the following topics are discussed:Discuss the importance of a chemical dependency counselor behaving ethically in interactions with clients. Consider the following:RelationshipsObligationsTrustClient welfareReputationWhat state laws or regulations involving standards of conduct, transmission, and storage of private health records exist?Professional codes of ethics contribute to maintaining ethical standards in a profession. Discuss professional codes in the counselor profession, such as the ACA code.Are there any national or regional professional organizations that promote ethical behavior in chemical dependency counseling profession?Describe the difference between behaving ethically and behaving legally, and give an example.What is the most serious legal consequence of the counselor behaving unethically, and what are the long-term effects of this consequence.The final slide in your presentation should be a reference page, detailing all of the resources you utilized in completing this presentation. Be sure to reference all of your sources in APA style format. 15 slides
5 pages
Module 2 Perfect Prints
Perfect prints will focus on a B2C (Business to consumer) model. This means that the t-shirts aim to have as their end-use ...
Module 2 Perfect Prints
Perfect prints will focus on a B2C (Business to consumer) model. This means that the t-shirts aim to have as their end-user the consumer and not other ...
Prepare a table with three columns
Classify the costs of this new product as direct materials, direct labor, manufacturing overhead, selling, or administrati ...
Prepare a table with three columns
Classify the costs of this new product as direct materials, direct labor, manufacturing overhead, selling, or administrative.Classify the costs listed as either product costs or period costs.List of expenses incurred by Everything Umbrella Inc.Cost of advertising the product.Fabric used to make the umbrellas.Maintenance of cutting machines used to cut the umbrella fabric so it will fit the umbrella frame.Wages of workers who assemble the product.President’s salary.The salary of the supervisor of the people who assemble the product.Wages of the product tester who stands in a shower to make sure the umbrellas do not leak.Cost of market research survey.Salary of the company’s sales managers.Depreciation of administrative office building.
Earn money selling
your Study Documents