Assignment 2

Assignment 2 - Capital Budgeting Assignment # 2 By...

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Capital Budgeting Assignment # 2 By Jacqueline R. Jones Presented To Dr. James Glenn May 5, 2011 Strayer University Financial Management – FIN 534-5016 Introduction With the basic tools for Financial Decision Making that is being used we must learn how to apply them to different decisions. As financial managers we must learn which investment the corporation should make for the betterment of its company. We will need to know how to compare the NPV (Net Present Value) rule to other investment rules that firms sometime use and how the Net Present Value rule is able to process the firms capital investment Firms raises the capital they need to make investment by issuing securities such as bonds and stock. Managers need to use the tools they have learned to value securities and our responsibilities as managers we must be able to determine which project or investment a firm should use.
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Bauer Industry is an automobile manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight trucks. Bauer plans to use a cost of capital of 12 to evaluate this project. Based on extensive research. , it has prepared the following incremental free cash flow projections (in millions of dollars): Year 0 Years 1-9 Year 10 _________________________________________________________________________ Revenues 100.0 -100.0 Manufacturing expenses
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Assignment 2 - Capital Budgeting Assignment # 2 By...

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