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Capital Budgeting

Assignment Details

Capital budgeting is utilized to determine if a project is worthwhile. The net present value (NPV), payback period, and internal rate of return (IRR) methods are used to rank and select which project to undertake. The following video outlines the NPV and IRR method of capital budgeting:

https://www.youtube.com/watch?v=HFFkFMfotT0

In this assignment, you are required to prepare a PowerPoint presentation reviewing 3 projects. You will calculate the NPV, IRR, and payback period for each project. Utilizing the capital budgeting calculations, you will need to select the best investment for the company. These calculations will be based on the following scenario:

AIU Industries has 3 potential projects to consider, all with an initial cost of $1,250,000. The company prefers to reject any project with a 4-year cut-off period for recapturing initial cash outflow. Given the cost of capital rates and the future cash flow for each project, determine which project the company should accept.

 

Cash Flow

Project A

Project I

Project U

Year 1

250,000

450,000

250,000

Year 2

250,000

450,000

400,000

Year 3

250,000

450,000

600,000

Year 4

250,000

450,000

800,000

Year 5

400,000

400,000

200,000

Year 6

400,000

400,000

800,000

Year 7

400,000

400,000

600,000

Year 8

400,000

400,000

200,000

Cost of Capital

4%

6%

8%

 

Please submit your assignment.

Submitting your assignment in APA format means, at a minimum, you will need the following:

  • Title slide: Remember the running head. The title should be in all capitals.
  • Length: 15 slides minimum
  • Body slides: This begins on the slide following the title slide and must be double-spaced (be careful not to triple- or quadruple-space between paragraphs). The typeface should be 12-pt. Times Roman or 12-pt. Courier in regular black type. Do not use color, bold type, or italics, except as required for APA-level headings and references. The deliverable length of the body of your presentation for this assignment is 15 slides. In-body academic citations to support your decisions and analysis are required. A variety of academic sources is encouraged.
  • Reference slide: References that align with your in-body academic sources are listed on the final slide of your presentation. The references must be in APA format using appropriate spacing, hanging indent, italics, and uppercase and lowercase usage as appropriate for the type of resource used. Remember, the Reference slide is not a bibliography but a further listing of the abbreviated in-body citations used in the paper. Every referenced item must have a corresponding in-body citation.

 

Grading Rubric: Maximum 200 Points

Grading Criteria

Points

Deliverable requirements addressed; understanding of material and presenter’s message and intent are clear 

80 points

Followed assignment guidelines and criteria

40 pts

Yes/Complete

Mostly

Not at all

Overall quality

40 pts

Excellent

Satisfactory

Needs Improvement

Scholarly research that supports the presenter’s  position is properly acknowledged and cited, and direct quotations do not exceed 10% of the word count of the body of the assignment deliverable 

50 points

Title slide, agenda, tables, exhibits, appendices or reference slides included

25 pts

Yes

Partially

Not at all

Content is original with less than 35% match

25 pts

Yes

36–50%

51% or over

Critical thinking: Position is well-justified; logical flow; examples  

20 points

Position is justified with examples

10 pts

Excellent

Satisfactory

Needs Improvement

Presentation flows logically

10 pts

Excellent

Satisfactory

Needs Improvement

Structure: Includes introduction and conclusion slides, proper slide formatting, and reads as a polished, academic  or professional presentation, as appropriate for the required assignment deliverable  

15 points

Includes introduction and conclusion slides

5 pts

Excellent

Satisfactory

Needs Improvement

Slides are formatted properly with 5 lines of text

5 pts

Excellent

Satisfactory

Needs Improvement

Reads as polished academic or professional presentation

5 pts

Excellent

Satisfactory

Needs Improvement

Mechanical: No spelling, grammatical, or punctuation errors 

20 points

Spelling and grammar are accurate

10 pts

Yes

Partially

Not at all

Punctuation is accurate

10 pts

Yes

Partially

Not at all

APA: Deliverable is cited properly according to the APA Publication Manual 

15 points

References are cited in accordance with APA formatting

10 pts

Yes

Partially

Not at all

Reference slide is included

5 pts

Yes

Partially

Not at all

 

For assistance with your assignment, please use your text, Web resources, and all course materials.

 

 

Your assignment will be graded in accordance with the following criteria. View the grading rubric.

 

Assignment Reminders:

 

  • Please submit your assignment.
  • Make sure you submit this assignment by the listed due date. Late deductions will apply for this assignment. Please refer to the Late Submission of Assignment policy.
  • If you need assistance, please view the Troubleshooting tips.
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    5. If you are still having difficulties after trying steps 1-4, please contact your course instructor.

 

Reference

Edspira. (2013, September 18). Net present value (NPV) [Video]. YouTube. https://www.youtube.com/watch?v=HFFkFMfotT0

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