Discussion C: Data, the Encyclopedia, and Supply ChainWelcome to the third discussion. In this course you will be introduced to a topic in the discussion. The first week of the module you will write about your initial thoughts after reviewing the resources. The initial post should be at least 300 words. During the following week you will reply to at least two of your classmates. The replies should be at least 100 words. See the discussion rubric for more details on grading. Discussions should always be completed prior to "class." If you are in an online class or an on ground course this is prior to the lesson portion of the week. Are you ready to begin?Watch Ted Talk: How Data Will Transform Business https://www.ted.com/talks/philip_evans_how_data_will_transform_business?language=enReview the website about data. https://www.data.govInitial Post (300-word post)It is suggested that Wikipedia has replaced the hardback encyclopedia books, such as Encyclopedia Brittanica. What other ways do you foresee technology changing businesses that have been around for hundreds of years? Explain. Give an example.

Create an Excel spreadsheet in which you use capital budgeting tools to determine the quality of 3 proposed investment projects, as well as a 6-8 page report that analyzes your computations and recommends the project that will bring the most value to the company.IntroductionThis portfolio work project is about one of the basic functions of the finance manager: allocating capital to areas that will increase shareholder value. There are many uses of cash managers can select from, but it is essential that the selected projects are ones that add the most value to the company. This means forecasting the projected cash flows of the projects and employing capital budgeting metrics to determine which project, given the forecast cash flows, gives the firm the best chance to maximize shareholder value.As a business professional, you are expected to:Use capital budgeting tools to compute future project cash flows and compare them to upfront costs.Evaluate capital projects and make appropriate decision recommendations.Prepare reports and present the evaluation in a way that finance and non-finance stakeholders can understand.ScenarioYou work as a finance manager for Drill Tech, Inc., a mid-sized manufacturing company located in Minnesota. Three capital project requests were identified as potential projects for the company to pursue in the upcoming fiscal year. In the meeting to discuss capital projects, the director of finance (and your boss), Jennifer Davidson, gives you a synopsis of the projects along with this question: Which one of these projects will provide the most shareholder value to the company?She also tells you that other than what is noted in each project scenario, all other costs will remain constant, and you should remember to only evaluate the incremental changes to cash flows.The proposed projects for you to review are as follows.Project A: Major Equipment PurchaseA new major equipment purchase, which will cost $10 million; however, it is projected to reduce cost of sales by 5% per year for 8 years.The equipment is projected to be sold for salvage value estimated to be $500,000 at the end of year 8.Being a relatively safe investment, the required rate of return of the project is 8%.The equipment will be depreciated at a MACRS 7-year schedule.Annual sales for year 1 are projected at $20 million and should stay the same per year for 8 years.Before this project, cost of sales has been 60%.The marginal corporate tax rate is presumed to be 25%. Project B: Expansion into EuropeExpansion into Western Europe has a forecast to increase sales/revenues and cost of sales by 10% per year for 5 years.Annual sales for the previous year were $20 million.Start-up costs are projected to be $7 million and an upfront needed investment in net working capital of $1 million. The working capital amount will be recouped at the end of year 5.Because of the higher European tax rate, the marginal corporate tax rate is presumed to be 30%.Being a risky investment, the required rate of return of the project is 12%.Project C: Marketing/Advertising CampaignA major new marketing/advertising campaign, which will cost $2 million per year and last 6 years.It is forecast that the campaign will increase sales/revenues and costs of sales by 15% per year.Annual sales for the previous year were $20 million.The marginal corporate tax rate is presumed to be 25%. Being a moderate risk investment, the required rate of return of the project is 10%.Your RoleYou are a finance manager at Drill Tech, Inc., who plays a major role in reviewing capital project requests.RequirementsJennifer reiterates that your report is critical for the company to select the project that will bring the most value to shareholders. Your calculations and report should address these items for her and other stakeholders:Apply computations of capital budgeting methods to determine the quality of the proposed investments. Use budgeting tools to compute future project cash flows and compare them to upfront costs. Remember to only evaluate the incremental changes to cash flows. Demonstrate knowledge of a variety of capital budgeting tools including net present value (NPV), internal rate of return (IRR), payback period, and profitability index (PI). The analysis of the capital projects will need to be correctly computed and the resulting decisions rational.Evaluate the capital projects using data analysis and applicable metrics that align to the business goal of maximizing shareholder value. Evaluate capital projects and make appropriate decision recommendations. Accurately compare the indicated projects with correct computations of capital budgeting tools and then make rational decisions based on the findings.Select the best capital project, based on data analysis and evaluation, that will add the most value for the company.Prepare an appropriate evaluation report for requestors, using sound research and data to defend your decision. Justify your decision with a clear analysis showing the findings of the analysis and which project has the best chance to increase shareholder value.Use your calculations and data to provide a clear picture of why your recommendation is the right one. This goes beyond just regurgitating the data. Think about how the data can tell the story that will be meaningful to the readers. Deliverable FormatFor this assessment, create two deliverables: An Excel spreadsheet showing the required cash flow forecasts and capital budgeting tool calculations for each project. Use the same spreadsheet but create separate tabs for each project.A report providing an analysis of the computations, the project selection decision, and justification for the decision, as well as its impact on the value of the firm. The project selection decision must have an analytical rationale to support it. Report requirements:Ensure written communication is free of errors that detract from the overall message and quality.Use at least three scholarly resources. Your report should be between 6 and 8 pages.Use 12 point, Times New Roman.Related company standards:Your report is a professional document and should follow the corresponding MBA Academic and Professional Document Guidelines (found in the MBA Program Resources), including single-spaced paragraphs.Use APA-formatted references.EvaluationBy successfully completing this assessment, you will demonstrate your proficiency in the following course competencies through corresponding scoring guide criteria:Competency 1: Apply the theories, models, and practices of finance to the financial management of an organization. Apply computations of capital budgeting methods to determine the quality of the proposed investments.Competency 2: Analyze financing strategies to maximize stakeholder value. Evaluate the capital projects using data analysis and applicable metrics that aligns to the business goals.Competency 3: Apply financial analyses to business planning and decision making. Select the best capital project, based on data analysis and evaluation, that will add the most value for the company.Competency 5: Communicate financial information with multiple stakeholders. Prepare an appropriate evaluation report for requestors, using sound research and data to defend the decision.

STUDENT 1 (Jena): Forward pricing rates are rates and factors such as: direct labor rates, various overhead rates, and cost and money factors utilized by contractors for pricing proposals for new procurement or changes to existing contracts. According to FAR 15.407-3, “when certified cost or pricing data are required, offerors are required to describe any forward pricing rate agreement (FPRAs) in each specific pricing proposals to which the rates apply and to identify the latest cost or pricing data already submitted in accordance with the FPRA” (para. 1). Contracting Officers (COs) will utilize the FPRA rates as the base line for pricing all contracts & changes that may occur over the duration of the period covered by the agreement. FPRAs have been found to be very usefully for contractors who may do many pricing actions over a specified period of time. However, there are many contractors who are reluctant to enter in to FPRAs. FAR 42.704 explains that’s contracting officers or auditors are responsible for establishing the final indirect cost that will be used to determine billing rates. According to the Federal Acquisition Regulation (FAR) 42.704, “the contracting officer (or cognizant Federal agency official) or auditors shall establish billing rates on the basis of information resulting from recent review, previous rate audits or experience, or similar reliable data or experience of other contracting activities” (para. 2). When establishing billing rates, is essential to ensure that rates are as close to the final indirect cost rates as anticipated for the contractors fiscal year as adjusted for any unallowable costs (FAR). Upon establishment of billing rates, the contracting officer, auditors, or the contractors may request to revise billing rates only when there is a mutual agreement between the parties. If agreement are unable to be reached, the billing rates may be determined by the contracting officer (or cognizant Federal agency official). Final overhead rates are completed by the Administrative Contracting Officer (ACO) within a 27- or 36 month cycle for major and non-major contractors (DCMA Manual 2201-03 Final Indirect Cost Rates, 2019, p. 17). The final overhead agreement utilizes rates and formulas to determine how much will be used to pay and complete the contract. The final overhead agreement is subject to audits and penalties when final overhead proposal do not comply with FAR part 15.407-4. In additional FAR 15.407-4 outlines which evaluated costs are subject to separate audit reports. According to FAR 15.407-4, “The objective of the overhead should-cost review is to evaluate significant indirect cost elements in-depth, and identify and recommend corrective actions regarding inefficient and uneconomical practices. If it is conducted in conjunction with a programs should-cost review, a separate overhead should-cost review report is not required.”ReferencesDCMA Manual 2201-03 Final Indirect Cost Rates. (2019). https://www.dcma.mil/Portals/31/Documents/Policy/DCMA-MAN-2201-03.pdf?ver=2019-02-20-154550-670.FAR. Acquisition.gov. https://www.acquisition.gov/content/part-15-contracting-negotiation.FAR. https://www.acquisition.gov/content/15407-4-should-cost-review.FAR. https://www.acquisition.gov/content/42704-billing-rates.STUDENT 2 (Amy): The FAR, Federal Acquisition Regulation, provides acquisition and procurement guidance and sets rules and regulations for the Department of Defense and Federal agencies. Forward Pricing Rate Agreements (FPRAs) are agreements that are negotiated in advance of a contract award. Direct labor rates and indirect/overhead costs are included in FPRAs per guidance within the FAR. The specific FPRA section in the FAR is 15.407-3 (United States Government, 2020). Negotiations on the forward pricing rates in advance can be difficult since the market and business volume may fluctuate and are not always able to be predicted accurately. Agreeing on rates for future contracts can also be risky. Inflation could be incorrectly accounted for as well as other unforeseen factors (Oyer, 2012).When an FPRA is requested by either the contractor or the contracting officer, the contracting officer is the entity responsible for reviewing the request and determining if the FPRA is a good fit for the contract. If the decision has been made to move forward with the FPRA process, the contractor must include supporting documentation with the agreement. The supporting documentation must include pricing and cost data to support the details contained in the FPRA. However, if there is a significant change in the pricing or cost data that was submitted in support of the agreement, the contractor must submit those altered details to the contracting officer for review. This also includes any other variables that might affect the terms set in the agreement. If deemed necessary, changing conditions may require that a new FPRA be established. The contractor or the contracting officer also have the ability to cancel the agreement (Oyer, 2012). An FPRA can speed up the contract process especially when many contract proposals are involved. The FPRA allows for the opportunity for contractors to skip contract negotiations when an FPRA is already in place since rates have already been agreed upon (Manning, 2019). However, FPRAs can be risky if incorrect rates were estimated or if inflation is not accounted for. Close monitoring of the agreements and making changes when necessary can help reduce the risk involved. ReferencesManning, B. (2019, February 1). Contracts and Legal: Forward Pricing Rate Agreements (FPRA). Retrieved from AcqNotes: http://acqnotes.com/acqnote/careerfields/forward-pricing-rate-agreements-fpra#:~:text=These%20rates%20are%20estimates%20of,audit%20or%20analyze%20the%20rates.&text=FPRAs%20are%20very%20useful%20for,volume%20of%20Government%20contract%20proposals.Oyer, D. (2012). Cost-Based Pricing: A Guide for Government Contractors. Vienna, Virginia: Management Concepts. Retrieved from http://web.a.ebscohost.com.ezproxy1.apus.edu/ehost...United States Government. (2020). Part 15 - Contracting by Negotiation. Retrieved from Acquisition.gov: https://www.acquisition.gov/content/part-15-contra...STUDENT 3 (Thomps): Federal Acquisition Regulation is the primary regulation that is used by all the executive agencies in the acquisition of supplies and services with appropriated funds. It precludes agency acquisition regulations that unnecessarily repeats or restate the FAR. FAR provides for coordination, simplicity and uniformity in the federal acquisition process. Moreover, it also provide for agency and public participation in the development of FAR as well as agency acquisition regulations. FAR provides a number of requirements as far as forward pricing rates is concerned. Forward pricing rates refers to an agreement between a contractor and a government agency in which certain indirect rates are established for a specified period of time (Acquisition, 2020). These rates are often used to price contracts as well as in modifying contracts. Based on FAR requirements, offerors are required to describe any of the forward pricing rate agreements in each of the specific proposal where the rates apply. Additionally, contracting officers are required to use the Forward pricing rate agreements as the bases for all the pricing of all the contracts, modifications and even the contractual actions that are to be performed within the period of agreement (Acquisition, 2020). Additionally, in terms of billing rates, contracting officers are required to establish billing rates that are based on the information from the recent review, rate audits of experience or similar reliable data from other contracting activities (Huntercpa, 2020). Consequently, billing rates should be prospectively revised by mutual agreements of the contracting officers. Overhead rate refers to the percentage of general expenses that consultants can bill to contacting government agencies (Huntercpa, 2020). Thus, based on the FAR requirements, contractors are required to prove that costs are allowable, reasonable and allocable as per the provisions for contracts with commercial organizations. ReferencesAcquisition. (2020). Forward pricing rate agreements. Retrieved from https://www.acquisition.gov: https://www.acquisition.gov/content/15407-3-forwar...Huntercpa. (2020). Overhead Rate Audits Explained. Retrieved from https://www.huntercpa.com: https://www.huntercpa.com/articles/overhead-rate-a...