# Analyzing Capital Expenditures

October 10, 2021
###### Discussion reply 2 | Psychology homework help
October 10, 2021

Assume that you have received a capital expenditure request for \$52,000 for plant equipment and that you are required to do a justification analysis using capital budgeting techniques.  The companyâ€ s cost of capital is 12% and the equipment (investment) is expected to generate net cash inflows of \$13,000 per year for 8 years and then \$9,000 for one year.

You are to calculate and explain your quantitative calculations of each of the four capital-budgeting techniques listed, then, based upon these calculations, write a summary that provides a justification to proceed or not proceed with the project.

• Calculate the projectâ€ s net present value (NPV).
• Calculate the projectâ€ s internal rate of return (IRR).
• Calculate the projectâ€ s profitability index.
• Calculate the projectâ€ s discounted payback period.
• Recommend whether the project should be accepted or rejected and explain why.

To complete this assignment, submit an Excel file with your time value calculations, and a two-page paper that explains the calculations and provides your recommended decision and explanation of why that decision is recommended.   The paper must be submitted as a Word document and it must follow APA style guidelines.

By February 19, 2013.

 Assignment 3 Grading Criteria Maximum Points Calculated NPV correctly. 16 Calculated IRR correctly. 16 Calculated Profitability Index correctly. 12 Calculated Discounted Payback correctly. 12 Recommended and explained a logical decision. 16 Used Excel function tools properly. 16 Writing Craftsmanship, APA and Ethical Scholarship. 12 Total: 100

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