timer Asked: Apr 17th, 2020

Question Description

Submit a draft of the Time Value of Money section of the final project, along with your supporting explanations. Base your calculations on the data provided in the 2017 UPS Annual Report. Be sure to substantiate your claims.

Submit your calculations on the designated tab of the Final Project Student Excel Workbook and your supporting explanations as a Microsoft Word document.

Specifically, the following critical elements must be addressed:

I.Time Value of Money

A. Using the Final Project Excel Workbook, compute the following time value of money figures: 1.Calculate the present value of the company based on the given interest rate and provided Free Cash Flows for the years 2015, 2016, and 2017.

2. Suppose the risk of the company changes based on an unanticipated decrease in the Free Cash Flows by 10% annually during the years 2015, 2016, and 2017. Recalculate the present value of the company.

3. Suppose that a potential buyer has offered to buy this company in three years. Based on the initial present value you calculated above in A1, what would be a reasonable amount for the buyer to pay for the company in three years’ time? Enter your answer and justify your reasoning in the Word document.

B.What are the implications of the change in present value based on risk? In other words, what does the change mean to the company, and how would you, as a financial manager, interpret it? Be sure to justify your reasoning with appropriate references/sources. Enter your answer and justify your reasoning in the Word document.

C.Based on the present value of the company that you calculated, and being mindful of the need to effectively balance portfolio risk with return, what recommendation would you make about purchasing the company as an investment at that price? Be sure to substantiate your reasoning with appropriate references/sources. Enter your answer and justify your reasoning in the Word document.

Additional information:Time Value of Money (VIP - USE THE ADJUSTED FREE CASH FLOWS FOR 2015, 2016, and 2017 as provided in the provided UPS Annual Report and input these numbers in your Excel Workbook.

2015 = $6,0822016 = $6,0072017 = $3,573

Guidelines for Submission: Submit your Final Project Excel Worksheet with the required calculations completed. Submit your written paper as a separate Microsoft Word Document (no PDF documents, please). Your paper must be submitted as a 2–3 page document, not including your calculations, (which should be completed in the Final Project Excel Workbook). Use double spacing, 12-point Times New Roman font, and one-inch margins. References/Sources and citations should be formatted according to the latest APA style.

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