SUBDOMAIN 319.1 - ACCOUNTING & FINANCE
SUBDOMAIN 319.2 - INFORMATION TECHNOLOGY
Competency 319.1.3 Capital Budgeting Analysis - The graduate correctly applies time value of money techniques and techniques that ignore present value for capital investment decisions.
Competency 319.2.1 Technology Tools - The graduate uses information technology tools for specified business purposes.
Competency 319.2.5 Information Management - The graduate selects appropriate technology applications to manage information and make decisions in given situations.
319.1.3-01: Calculate net present value based on a given set of facts.
319.1.3-02: Apply the results of a net present value calculation to a given decision situation.
319.1.3-03: Calculate internal rate of return based on a given set of facts.
319.1.3-04: Apply the results of an internal rate of return calculation to a given decision situation.
319.1.3-05: Calculate the period of time required to recoup the money expended for new equipment in a given situation.
319.1.3-06: Calculate the accounting rate of return based on a given set of facts. 319.1.3-07: Explain the relationship of the accounting rate of return to the internal rate of return for the same capital investment alternative.
319.1.3-08: Calculate net cash flow in a given situation.
319.1.3-09: Explain the impact of depreciation on net cash flow.
319.1.3-10: Explain the role of the weighted average cost of capital in capital budgeting analysis.
319.2.1-04: Produce a computer-based presentation on a business topic.
319.2.5-05: Demonstrate the appropriate use of specified software application in a given situation.
It is imperative that you enter your first initial and last name in the fields designated on the template. Your work and results will be based on an individualized dataset that will auto load in the template when you enter your first initial and last name. Your work will not be correctly graded if you fail to complete these fields.
Entrepreneur D supplements income from a professional practice by investing in start-up and other business opportunities that meet specific investment criteria. Entrepreneur D operates all of these extra business activities as a single limited liability company and utilizes discounted cash flow analysis as a primary tool for evaluating each potential investment. There is an opportunity to purchase the patent for a newly invented gardening tool that Entrepreneur D would manufacture and sell on a wholesale basis. Entrepreneur D has asked you to prepare an analysis of this investment opportunity and make a recommendation regarding the course of action to take.
Entrepreneur D plans to retire from professional practice and cease all business activities nine years from now. The plan for the garden tool is to produce and sell it for eight years and then sell the patent and production rights to a national company. Entrepreneur D has negotiated a tentative lease on a building that is well suited for this manufacturing process. The building must be remodeled to meet manufacturing needs, and then it must be restored to its original configuration at the end of the eight-year lease. At that time Entrepreneur D will be able to sell some of the non-specialized equipment (e.g., forklifts) for small salvage values.
The remodeling cost is given on the template in your individualized dataset.
Entrepreneur D has asked you to assume a 12% applicable weighted average cost of capital.
Entrepreneur D has also asked you to assume a combined federal and state income tax rate. The tax rate is given on the template in your indvidualized dataset.
Note: For definitions of terms commonly used in the rubric, see the attached Rubric Terms.
Note: When using sources to support ideas and elements in a paper or project, the submission MUST include APA formatted in-text citations with a corresponding reference list for any direct quotes or paraphrasing. It is not necessary to list sources that were consulted if they have not been quoted or paraphrased in the text of the paper or project.
Note: No more than a combined total of 30% of a submission can be directly quoted or closely paraphrased from sources, even if cited correctly. For tips on using APA style, please refer to the APA Handout web link included in the General Instructions section.
Here are some helpful APA resources: http://www.apastyle.orghttp://www.citationmachine.net
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