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Unit 4 - Individual Project
Assignment Overview
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Type: Individual Project
Unit: Long-Term Financial Management
Due Date: Sun, 12/18/16
Grading Type: Numeric
Points Possible: 130
Points Earned: 0
Deliverable Length: 2-3 pages
Assignment Details
Learning Materials
Reading Assignment
My Work:
Online Deliverables: Submissions
This assignment is the Common Assignment
Assignment Details
Assignment Description
A manufacturing company is thinking of launching a new product. The company expects to sell $950,000 of the new product in the first year and $1,500,000 each year
thereafter. Direct costs including labor and materials will be 45% of sales. Indirect incremental costs are estimated at $95,000 a year. The project requires a new plant that
will cost a total of $1,500,000, which will be a depreciated straight line over the next 5 years. The new line will also require an additional net investment in inventory and
receivables in the amount of $200,000.
Assume there is no need for additional investment in building the land for the project. The firm's marginal tax rate is 35%, and its cost of capital is 10%.
To receive full credit on this assignment, please show all work, including formulae and calculations used to arrive at financial values.
Assignment Guidelines
Using the information in the assignment description:
Prepare a statement showing the incremental cash flows for this project over an 8-year period.
Calculate the payback period (P/B) and the net present value (NPV) for the project.
Answer the following questions based on your P/B and NPV calculations:
Do you think the project should be accepted? Why?
Assume the company has a P/B (payback) policy of not accepting projects with life of over 3 years.
If the project required additional investment in land and building, how would this affect your decision? Explain.
Your submitted assignment (130 points) must include the following:
A doublespaced Word document of 2–3 pages that contains your calculation values, your complete calculations, any formulae that you used, and your answers to the
two questions listed in the assignment guidelines.
You must include your explanation of how you used Excel for your calculations if applicable.
Grading
You will be graded on the accuracy of your value calculations as well as your demonstrated understanding of payback periods, net present value, and cash flows.
This assignment will be assessed using the rubric provided here.
Please submit your assignment.
For assistance with your assignment, please use your text, Web resources, and all course materials.
Individual Project Rubric
Grading Criteria
Percentage
Deliverable requirements addressed; understanding of material 40%
and writer's message and intent are clear.
Calculation methods, where required, are contextually
10%
appropriate, fully explained, and presented in a manner that is
easy to understand.
External research incorporated in the paper, if any, supports
5%
the writer's position properly acknowledged and cited; direct
quotations may not exceed 10% of the word count of the body
of the assignment deliverable (excluded title page, abstract or
table of contents if used, tables, exhibits, appendices, and
reference page(s).) Inclusion of plagiarized content will not be
tolerated and may result in adverse academic consequences.
Critical thinking: Position is well-justified; logical flow;
examples provided where appropriate.
20%
Structure: Includes introduction and conclusion; proper
paragraph format; reads as a polished academic paper or
professional presentation, as appropriate for the required
assignment deliverable.
10%
Mechanical: No spelling, grammatical, or punctuation errors.
10%
assignment deliverable.
Mechanical: No spelling, grammatical, or punctuation errors.
10%
APA: Deliverable is cited properly according to the APA
Publication Manual (6th ed.).
5%
Reading Assignment
Editorial Board; Ch. 6, 7
Assignment Objectives
Analyze project analysis and evaluation processes
Evaluate capital project techniques and cost of capital valuation
Execute concepts of NPV and cash flow analysis
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