Caledonia Project

For this weeks assignment the l authorizeing team give represent an assistant manager at Caledonia Products. Acting as an assistant manager, the team has been given the task with the responsibility of recommending and responding to questions link to the capital figureing process. The get wind has a planned budget that pass on last for about five years after which clock it pull up stakes be terminated. The following information represents the findings that were found. Analyzing Project Caledonia should focus on the buzz off emancipate coin flow because the open bills in flow measures the financial performance as operating cash flow minus capital expenditure. The accounting profits splinter to be higher than economic profits as they go across certain implicit costs such as event costs. In this case focusing on the count on free cash flow impart give the company a better overall picture of the financial health during this project. silver Flows Ca sh flows differ from accounting profits due to wear and tear expense which is non cash item. Ito earnings after tax piece in calculating accounting profit depreciation is deducted, this will reduce the profits.

The equation is: The NPV means Caledonia requires initial investing capital of $100,000 and provides in store(predicate) cash flows that have a present measure of $319,230. Consequently, the project cash flows are $219,230 much than the required investment. given that the projects futurity cash flows are more than the initial cash outlay required to make the investment, the project is an accept able project. Caledonias Internal Rate of R! eturn (IRR) using a financial calculator Caledonias requires an initial investment of $100,000 and provides future cash flows that after a return on the incumbent investment of 89.12%. Since the minimum rate needed to earn on the investment is 15%, the new project is an comme il faut investment opportunity....If you want to get a full essay, fix up it on our website: BestEssayCheap.com

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