Capital Budgeting Case Essay

This week, information Team C, has completed capital budgeting on passel A and spate B. We were given $250,000.000 to acquire a corporation. We decided to choose Corporation B. To realize that our last was the best, this week, we defined, analyzed, and acted the dismiss Present prise and the Internal reckon of Return for both Corporations. We made the decision based on more financial sense. Below, we halt outlined our decision making process.DefinedWhat we have done first to help define our Net Present determine and Internal Rate of Return was to project 5 years in advance the income and bullionflow would potentially look like. Understanding that Corporation A has a ten percent discount rate each year and Corporation B has an 11 percent discount rate, Learning Team C was able to an income statement and cashflow statement defining the detailed financial statements on how our company would operate the two corporations. The next step in our decision making process would b e to analyze what we have detailed.Analyze incurTo be able to compare the two corporations the team reviewed the projected cash flows for each corporation. What the team learned was that both corporations had a negative Net Present Value, Corporation A NPV is $-966.580.90, whereas B is $-633, 959, 95. Reviewing this report Team C identified that Corporation B began to generate revenue in the plan of attack fourth and fifth years. In addition to the revenue turning over, scarce so did Corporation Bs Cashflow. Corporation B began to try cashflow by the fourth and fifth year. The team has analyzed, that as the corporation continues to get under ones skin due to the Net Present Value. The next step would be to interpret what we just analyzed.InterpretHow Learning Team C came up in choosing Corporation B was through the Net Present Value. Corporation B will be giving the company, over five years, a actual value cash return of approximately $-633, 959, 95 above the elevenpercent ret urn. In conclusion, making it the more favorable choice.ConclusionThis week Learning Team C has defined, analyzed, and interpreted two corporations by completing a capital budgeting exercise. They have agreed that Corporation B would be the company that they would acquire from a business standpoint. Net Present Value was used to help influence and determine this decision.