- Capital Budget Decisions In Week Seven You Completed The First Part Of This Case The Estimate Of Free Cash Flows For T 1 (61.11 KiB) Viewed 52 times
Capital Budget Decisions In week seven you completed the first part of this case – the estimate of free cash flows for the Dawgs “R” Us new bake oven project. Since case results might vary, the expected free cash flows are in the table below. Please use these numbers when completing this case. Year o Operating Cash Flow Year1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 S 254,700 S 345,300 $ 259,250 S 207,035 S 207,035 S 157,858 5128,700 5 126,700 LESS: Investment in Operating Capital Change in FA Change in NWC $ $ 1,350,000 $ $ 20,000 $ $ S $ $ S S $ 5 S S $ 65,000 S (20,000) - Free Cash Flow S (1.370,000 $ 254,700 S 345,300 $ 259,260 S 207,035 S 207,036 S 167.868 128,700 5214,700 Use these numbers to answer the
questions below. Your submission can be in excel or word format, but please be sure to show your work, formula, or functions that you used to find your answer. Take the results of your first six
questions and provide a few sentences to a paragraph recommendation to management about the oven replacement decision. Be sure to justify your recommendation with sound reasoning based on these capital decision metrics, and any other metrics that you feel might be important to this decision. This case does not need to follow APA guidelines for its submission. You are not required to use outside sources to complete this, but if you do be sure to cite those sources. Your response can be fully in Excel, fully in Word, or a combination of them as you deem appropriate for this assignment. My grading will be based in part on your calculations, but mostly in your interpretation and analysis of the results (*Its important to note - I am not as concerned about the correct ratios as I am your ability to apply those results to your interpretation of the problem). Week 8 Case Study
Questions 1. What is the payback period? 2. What is the discounted payback period: 3. What is the NPV? 4. What is the IRR? 5. What is the MIRR? 6. What is the Profitability Index? 7. What would you recommend to management based on this analysis?