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Fin 301, Principles of Finance, Fall 2019
Fin 301, Principles of Finance, Fall 2019
Capital Budgeting Assignment – Due Date: Nov 14, 2019 at 11:59pm
NOTE: All analysis should be done in MS Excel, and a memo to your boss explaining the situation, your analysis, and conclusion should be prepared in MS Word. You must upload both files to be graded.
You will only get full credit for the assignment if your analysis is correct, all calculations and/or formulas use cell references, and your memo has the right content, flows well, and is properly formatted, and grammatically correct. An example of a good memo, and an Excel template is provided for your benefit. You can add or delete columns in the excel template as needed.
Zenix Corporation has a machine that either should be repaired or should be replaced soon. You have recently been hired by Zenix and one of your assignments is to help decide whether replacing the machine, or repairing it is in the best interest of your company.
Investment required for repairing the machine is only $1,500,000 and cost to replace the machine is $9,000,000. Repairing the machine will cut down on the number of returns from customers and increase cash flows, while replacing the machine may increase the number of units sold. Zenix has evaluated and calculated additional cash flows that will be generated under the two scenarios over the next five years as follows:
Year Cash flow (if repaired) Cash Flow (if replaced)
1 557,000 5,613,000
2 607,000 3,485,000
3 478,000 2,878,100
4 513,000 1,697,800
5 387,000 1,157,000
Zenix does not accept projects that will pay back in more than 3 years, or any projects that will not maximize shareholder wealth. So, you will need to use all capital budgeting techniques you’ve learnt in your Finance class to ensure that the right option is chosen.
Cost of capital for the project (repair or replacement) could be anywhere from 10% to 14%, so you will conduct your analyses at various weighted average cost of capital (WACC) or Required rate of return points including at least five at 9.0%, 11%, 13%, and 15% for both scenarios, and also draw an NPV profile for both situation using your calculations.
Use your knowledge of capital budgeting and time value of money to decide which of the options is better for Zenix. All analysis must be done in Excel. Your excel model should be such that it can be used by Zenix for other similar capital budgeting situations – so anyone can change any numbers and use the model again. This would require all calculations to be using cell references and excel functions. You must write a memo to your boss, explaining the situation, your analysis, and your conclusion. You must also explain the drawbacks of your technique/s if there are any.
Make sure that all your submissions have your full name, class, and section number included.
Economic Picture of the World in 200 years to come
Economic Picture of the World in 200 years to come
Introduction
Individuals have all the time been intrigued of how and what the economic picture of the world will look like in the future. In order to understand the future, it is important for one to understand and know about the past. This involves understanding what led the world to where it is today and the economic variables that have changed along the way. The world has greatly changed in the last several years but it is observed that human beings are driven by the same human needs such as food, feeling of being loved and appreciated, sleep, and sex. As much there may be several economic changes in the future, the need for such basic needs is not likely to change.
Among the changes likely to be experienced in the future include the society transitioning from an oil-dependent society, development of new forms of medicine, development of artificial intelligence, and continued exploration of the space. The world is also likely to experience challenging climatic changes and new economic inventions that are likely to make life easier and entertaining for some individuals. The economic situation in the next 200 years will be more sophisticated to understand and comprehend in relation to economic variables that include investment, innovations, productivity, and taxation systems that regulate the markets. It will be important to understand how societies and economies assimilate and create paradigm-changing technologies and economic situations of organizational structures and government accountabilities. Individuals are likely to spend more of their income on health matters and in fighting and getting rid of diseases such as HIV/AIDS. Vaccines that are used to prevent or eliminate diseases will become affordable to low income earners across the world. The development of such vaccines will be attributed to high levels of technology that involves the use of sophisticated machines. Countries across the world are also likely to dedicate more of their income in eradication of malaria and an effective vaccine that would completely eradicate HIV/AIDS. Getting rid of such diseases will ensure a more healthy population and thus a more productive economy.
The development of the internet and web is believed to provide a generative and free flow of information in a more controlled, safer, commercial, and a problem solving pragmatic manner. The development of internet media such as Apple and Face book will promote cloud capitalism, whereby the consumers will allow the producers and companies to manage information, ideas, money, media, tools, and software on their behalf. This will give companies the opportunity to know more about their clients through sharing of data and thus make the relationship between producers and consumers become very close. Given that the human population is expected to significantly increase, the demands for food, energy, and water is expected to equally increase. The human population presently uses approximately 40% of the global primary energy production and this is expected to increase thereby bringing in adverse economic consequences in the future. The demand for resources by the increased population will put pressure for individuals to set up more industries to produce more food. Such industries will in turn emit more toxic chemicals, which when become emitted into the environment, will lead to the elimination of such species.
Conclusion
The economic situation of the world is fast changing given the new inventions and technologies. The world will be very sophisticated 200 years from now in terms of industrial production. The world will have become very developed with a more accessible source of information between buyers and sellers; employers and employees. The world will be more diverse with individuals being able to co-ordinate economic activities in various countries across the world just at the touch of a button.
Economic or technological change that had the greatest impact on the way Americans thought about freedom in the late 19th cen
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Economic or technological change that had the greatest impact on the way Americans thought about freedom in the late 19th century?
Introduction
The market revolution depicts an appropriate label for the 19th century economic transformation that took place in America. The market revolution is the economic change that had the greatest impact on the way Americans thought about freedom in the late 19th century. This recognizes that fundamental changes transpired and that the key to the changes were based within the size and character of the market. The 19th century Market Revolution produced specialization of commodities, providing self-made prosperity to the Americans. Although America was regarded as the fountain of opportunities, immigrants who flooded the nation searching for livelihood were met by oppression and exploitation. The flood of people, in search of jobs generated a prospect for businesses to take advantage of these people. The workplace environment in most places was heinous. This brought about the necessity for organized labor. Workers organized themselves because they supposed there was authority in numbers and most prominently, the working environment was unsafe, and unhygienic. Prior to the beginning of the 19th century Market Revolution, the American government was fundamentally elitist camouflaged as a democracy. Prior to the advent of the market revolution, elitism was tightly embedded in the American society and government.
Purkitt asserts that, while significant new expertise was introduced in a small number of industries, most of the era’s economic development was not associated to new technology. Prior to the market revolution, the majority of manufacturers maintained old methods and tools, and farmers were not gaining from new technologies until around 1850. But whilst the prominence placed on the phrase “market” is suitable, it is similarly significant that we identify the full denotation of the term. The phrase refers to the vivid expansion of the market by means of the construction of canals and roads. But the phrase depicts more than simply an expanded field of exchange. The new approach to market was most radical.
Haycox posits that, previously the majority of Americans took part in neighborhood markets. Regularly labeled pre-capitalist or traditional, these markets were incorporated within a wider web of obligations and associations binding community members as one. Neighbors traded commodities with neighbors, and business was administered by local principles.Eric asserts that, with the accessibility of more lucrative and distant, more people freed themselves from the traditional modes of exchange. Freedom from conventional economic dealings also signified freedom from conventional approaches to people’s sources of income. Producers that previously aimed at offering rational comfort for their families and themselves now thought in relation to maximizing their output. Farmers who had previously planted various crops so as to accomplish self-reliance now focused their labors on generating surpluses that might take full advantage of their monetary returns. Craftsmen who had previously operated tiny shops thought in relation to hiring additional employees so as to increase their sales. In brief, profiteering became more fundamental to the producers and, therefore, gained authenticity as the rationale of economic behavior.
CONCLUSION
The market revolution transformed the approach as well as the goals Americans applied to their labor. It turned farmers and craftsmen into businessmen, and it changed the dealings between buyers and sellers, employees and employers. In short, whereas the market revolution offered new opportunities and better freedom, it also produced great concern. Conventional markets had been restrictive, but they facilitated in anchoring communities and influenced social stability.
Works cited
Eric Foner. Give Me Liberty: An American History, New York: W.W. Norton and Company, 2008. Print.
Haycox, Stephen. Alaska: An American Colony. Seattle: University of Washington Press,
2006. Print.
Purkitt, Helen. American History: World Politics. 2009/2010.NY: McGraw Hill, 2003. Print