PART 1 As you learned in the practice assignment (Practice: Ratio Analysis), many different calculations need to be completed to assist an organization with its financial statements.
Write a 250-word response reflecting on your experience making the calculations from the practice assignment. In your reflection, share your thoughts on the activities within readings for this section of the course. Consider how calculating financial statements will help drive effective business decisions.
Answer the following questions within your response:
Which calculations were challenging for you? Why?
Which ratios were difficult to understand?
What will you do differently in the following modules?
If you did not have any challenges, respond to the following questions:
What prepared you for these calculations?
What advice would you give a classmate who needs assistance?
Submit your assignment.
Review the scenario and complete the activity that follows. This scenario can also be found in the “Problems – Series A” section 10-19A of Ch. 10, “Planning for Capital Investments” of Fundamental Managerial Accounting Concepts.
Dwight Donovan, the president of Donovan Enterprises, is considering 2 investment opportunities. Because of limited resources, he will be able to invest in only 1 of them.
Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of 4 years and no salvage value.
Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $400,000 and for Project B are $160,000. The annual expected cash inflows are $126,000 for Project A and $52,800 for Project B.
Both investments are expected to provide cash flow benefits for the next 4 years. Donovan Enterprises’ desired rate of return is 8%. Your task as Senior Accountant is to use your knowledge of net present value and internal rate of return to identify the preferred method and best investment opportunity for the company and present your results to Dwight Donovan.
Use Excel®—showing all work and formulas—to compute the following:
The net present value of each project. Round your computations to 2 decimal points.
The approximate internal rate of return for each project. Round your rates to 6 decimal points.
Continue to Presentation tab for details.
Create an 8- to 10-slide presentation showing the comparison of the net present value approach with the internal rate of return approach that you calculated.
Complete the following in your presentation:
Analyze the results of the net present value calculations and the significance of these results, supported with examples.
Determine which project should be adopted based on the net present value approach and provide rationale for your decision.
Analyze the results of the internal rate of return calculation and the significance of these results, supported with examples.
Determine which project should be adopted based on the internal rate of return approach and provide rationale for your decision.
Determine the preferred method in the given circumstances and provide reasoning and details to support the method selected.
Synthesize results of analyses and computations to determine the best investment opportunity to recommend to the president of Donovan Enterprises and provide rationale for your recommendation.
Include detailed speaker notes