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FIN 540 Week 6 Syndicate Team Capital Budgeting Problem

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Question;Your Company is thinking of acquiring another corporation.You have two choices, the cost of each choice is $250,000. You cannot spend more than that, so acquiring both corporations is not an option, the following are the critical data,Corporation A:Revenues = 100K in year one, increasing by 10% each yearExpenses = 20K in year one, inxreasing by 15% each yearDepreciation Expense = 5K each yearTax Rate = 25%Discount Rate = 10%Corporation BRevenues = 150K in year one, increasing by 8% each yearExpenses = 60K in year one, increasing by 10% each yearDepreciation Expense = 10K each yearTax Rate = 25%Discount Rate = 11%Compute and analyze items (a)-(h) using a Microsoft Excel Spreasheet. Ensure all calculations can be seen in the background of the applicable spreadsheet cells (leave an audit trail for others to see how you arrived at your answers).a) calculate a 5-year Projected Income Statement (sheet one in my spreadsheet)b) calculate a 5-year Projected Cash Flow (sheet 2)c) calculate Net present Value (sheet 3)d) calculate the Internal Rate of Return (sheet 4)e) Based on items (a) through (d), which company would you recommend acquiring?

 

Paper#49806 | Written in 18-Jul-2015

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