- 21 Mar, 2021
- 0 Comments
- 3 Mins Read
accounting
There are 3 parts to this assignment. Please complete the workbook, write a 250 word Discussion on Capital Budgeting And write the Executive Summary.
Step 1: Make Cost of Capital Decisions
MCS provides consulting services for clients to help them identify areas of improvement in their financial structure and apply industry best practices in future business decisions. McCormick needs the expertise of MCS consultants to better understand the financial implications of pursuing a new project that requires an initial investment to build a new plant and purchase equipment. To provide these services, a junior partner must first understand the cost of capital by exploring weighted average cost of capital (WACC), capital asset pricing model (CAPM), and market value ratios.
Working in this Project 5 McCormick Workbook Elisa has provided, complete the Cost of Capital worksheet. The Cost of Capital worksheet contains information about weight of equity and debt, cost of equity and debt, and the weighted average cost of capital, as well as questions that will help the client in selecting the best financing decision.
When you have completed the Cost of Capital worksheet, submit it to the submission folder located in the final step of this project. You should aim to complete this step during Week 10.
Now that you have completed Step 1, proceed to Step 2, where you will make capital budgeting decisions.
Step 2: Make Capital Budgeting Decisions
McCormick & Company will also need assistance in understanding how their anticipated growth, debt, market return, and marginal tax rate will affect their bottom line if they choose to pursue this new project.
Recalling what you have learned in the previous project about the time value of money and present value, you will also need to be knowledgeable about the ROE, ROA, and the DuPont Equation, as well as capital structure and valuation of multiple cash flows to help McCormick make the decision on the project.
Working with the same Project 5 Excel Workbook you used in Step 1, complete the Capital Budgeting worksheet. This worksheet contains additional information on the data that will drive McCormick’s investment decision—whether or not to build a new plant and purchase equipment.
When you have completed the Capital Budgeting worksheet, submit the Project 5 Excel Workbook to the folder located in the final step of this project. As you enter Week 11, proceed to Step 3, in which you will discuss capital budgeting with the finance team.
Step 3: Discuss Capital Budgeting
Calendar Invite
Event: Capital Budgeting Discussion
Location: Compass Room
Meeting Organizer: Elisa Izuki, MCS Managing Senior Director Partnerships
Elisa has asked the finance team to meet and discuss how capital budgeting will influence McCormick’s investment decision. Complete the following tasks within your group:
Discuss whether McCormick & Company should invest in a new factory in Largo, Maryland. Give credit to any sources you use to support your statements.
Discuss how understanding capital budgeting will impact this decision. Give credit to any sources you use to support your statements.
Later in the week, after you are back in your office, you have a follow-up discussion with your MCS colleagues in an effort to summarize the key lessons from your discussion on capital budgeting at the meeting. Respond to your colleagues’ original discussion posts and give credit to any sources you use to support your statements.
During Week 11, submit one original posting of at least 250 words in the Capital Budgeting Discussion
Step 4: Prepare Executive Summary
INBOX (1 NEW EMAIL)
From: Frank Marinara, Director of Finance
To: You
Hope all is going well.
Now that you’re concluding your project for McCormick & Company, please prepare an executive summary based on your analysis and recommendations from the previous steps. This executive summary, along with citations for any sources you use, should be about one page in length.
Within your executive summary, you may also want to reflect on what you could have done better on this project and how you plan to improve on future projects. The reflection is optional, but I think you’ll find it beneficial to your personal growth. In addition, I’d like you to prepare a brief PowerPoint presentation highlighting your analysis and recommendations to help McCormick & Company identify areas of improvement in their operations and explore options to make cost of capital decisions based on capital budgeting.
Can’t wait to see the summary and presentation.