In: Other Topics

Submitted By jullebin

Words 2149

Pages 9

Words 2149

Pages 9

IF You Want To Purchase A+ Work then Click The Link Below For Instant Down Load http://www.acehomework.net/?download=devry-busn-379-full-course-project-part-1-and-part-2-project IF You Face Any Problem Then E Mail Us At JOHNMATE1122@GMAIL.COM

Objective

The objective of the project is applying financial analysis concepts in real-life investment scenarios. The project will be divided in two sections with Part I due at the end of Week 3 and Part II at the end of Week 6. Part I of the project will give students the opportunity to use valuation and time value of money techniques to evaluate stocks and bonds under different market conditions. Part II of the project will require students to incorporate the concepts of cost of capital, capital budgeting and capital structure in evaluating a specific capital investment project using the Net Present Value approach. Both Part I and II will include calculations, as well as a written analysis about the results and implications of these calculations.

• For detailed instructions and requirements about Part I of this course project, click here.

• For detailed instructions and requirements about Part II of this course project, click here. Guidelines

• The project is subdivided in Tasks. Part I contains Tasks 1, 2 and 3 and is due at the end of Week 3. Part II contains Task 4 and 5 and is due at the end of Week 6.

• Present all your calculations and formulas used along with your final results. You will be graded on the quality of your calculations, as well as on the written analysis provided.

• For any recommendations or conclusions provided, support your conclusions with detailed information.

• Use the grading rubric provided below as a guideline for project development.

• All DeVry University policies are in effect including the plagiarism policy.…...

...Task 5: Cost of Capital AirJet Best Parts Inc. is now considering that the appropriate discount rate for the new machine should be the cost of capital and would like to determine it. You will assist in the process of obtaining this rate. Compute the cost of debt. Assume AirJet Best Parts Inc. is considering issuing new bonds. Select current bonds from one of the main competitors as a benchmark. Key competitors include Raytheon, Boeing, Lockheed Martin, and the Northrop Grumman Corporation. What is the YTM of the competitor’s bond? You may use a number of sources, but we recommend Morningstar. Find the YTM of one 15 or 20 year bond with the highest possible creditworthiness. You may assume that new bonds issued by AirJet Best Parts, Inc. are of similar risk and will require the same return. (5 pts) What is the after-tax cost of debt if the tax rate is 34%? (5 pts) Explain what other methods you could have used to find the cost of debt for AirJet Best Parts Inc.(10 pts) Explain why you should use the YTM and not the coupon rate as the required return for debt. (5 pts) Compute the cost of common equity using the CAPM model. For beta, use the average beta of three selected competitors. You may obtain the betas from Yahoo Finance. Assume the risk free rate to be 3% and the market risk premium to be 4%. What is the cost of common equity? (5 pts) Explain the advantages and disadvantages to use the CAPM model as the method to compute the cost of......

Words: 419 - Pages: 2

...1. Regions Best (1+ .1317/12)^12 -1 =0.14 EAR = 14% National First (1+ (6.75+3.25)/2)^2 -1 =.1025 EAR = 10.25% 2. Based on my calculations I would choose the National First loan because the EAR is only 10.25%. The EAR for the Regions Best loan is 14%. The ideal EAR for the company would be the smallest rate. 3. (1+8.6/12)^12 -1 = 8.95%. Monthly payment 8.95% of $6,950,000 = $622,025. By taking a smaller amount loan will save them money that they will need to pay back in the end. If they don’t borrow enough they may end up closing because they ran out of money to get their feet off the ground. It all comes down to saving money now and taking that chance of starting quickly, or spending money now to get the factory set up and make money later. Task 2: Evaluating Competitor’s Stock 1. Lockheed Martin Corporation as of May 12, 2012 Price: 85.21 Dividend: 4.00 Rate of Return 4*(1+.05)/85.21 + .05 =.1204 =12.04% 2. Current Share Price Rate of Return = 12.04% 1.50*(1+.01) / (.1204-.01) =$13.72 3. Preferred Stock Price 1.5 / .1204 =$12.46 I would assume that the stockholder would want the current price to be higher than the preferred price because that would mean the stock is doing better than projected to be at that point in time. 4. If the dividends are increased the price of the stock will rise. If......

Words: 338 - Pages: 2

...Course Project Part 1 Task 1: Assessing loan options for AirJet Best Parts, Inc. (1) EAR of National First Bank loan is 10.25%. APR = 3.25 (Prime Rate) + 6.75 M = 2 (Compounded semiannually) Formula: EAR = (1+APR/M)^M – 1 Solution: 0.1025 = (1+.10/2)^2 – 1 EAR of the Regions Best Bank loan is 13.99%. APR = 13.17 M = 12 (Compounded monthly) Formula: EAR = (1+APR/M)^M – 1 Solution: 0.1399 = (1+.1317/12)^12 – 1 (2) I recommend using National First Bank because the APR and the EAR are lower than Regions Best, which will result in paying back less interest over the course of the loan. (3) The monthly payment amount of the loan is $147,357.20. I agree with this decision because APR and EAR would be lower than National First resulting in paying back less interest over the duration of the loan. I got this answer with the following information and formula in Excel: PV= $6,950,000 r= 8.6% =PMT(rate,nper,PV,FV) m= 5 (years) Task 2: Evaluating Competitor’s Stock (1) The competitor I chose is Raytheon and the rate of return assuming the dividend growth rate is 5% would be 7.57%. Raytheon’s latest dividend amount was obtained from Yahoo Finance and used with the following formula. g = 5% R = ? D1 = 2.2 (dividend amount) P0 = $85.28 (stock price) Formula: R = D1/P0 + g Solution: R = 2.2/85.28 + .05 = .0757 = 7.58% (2) Current share price of Air Jet Best Parts, Inc. is $23.06. Rate of return is...

Words: 585 - Pages: 3

...Course Project Part II Introduction You will assume that you still work as a financial analyst for AirJet Best Parts, Inc. The company is considering a capital investment in a new machine and you are in charge of making a recommendation on the purchase based on (1) a given rate of return of 15% (Task 4) and (2) the firm’s cost of capital (Task 5). Task 4. Capital Budgeting for a New Machine A few months have now passed and AirJet Best Parts, Inc. is considering the purchase on a new machine that will increase the production of a special component significantly. The anticipated cash flows for the project are as follows: Year 1 $1,100,000 Year 2 $1,450,000 Year 3 $1,300,000 Year 4 $950,000 You have now been tasked with providing a recommendation for the project based on the results of a Net Present Value Analysis. Assuming that the required rate of return is 15% and the initial cost of the machine is $3,000,000. 1. What is the project’s IRR? (10 pts) 2. What is the project’s NPV? (15 pts) 3. Should the company accept this project and why (or why not)? (5 pts) 4. Explain how depreciation will affect the present value of the project. (10 pts) 5. Provide examples of at least one of the following as it relates to the project: (5 pts each) a. Sunk Cost b. Opportunity cost c. Erosion 6. Explain how you would conduct a scenario and sensitivity analysis of the project. What would be some project-specific risks and market risks related to...

Words: 707 - Pages: 3

... Course Project Part II Introduction You will assume that you still work as a financial analyst for AirJet Best Parts, Inc. The company is considering a capital investment in a new machine and you are in charge of making a recommendation on the purchase based on (1) a given rate of return of 15% (Task 4) and (2) the firm’s cost of capital (Task 5). Task 4.Capital Budgeting for a New Machine A few months have now passed and AirJet Best Parts, Inc. is considering the purchase on a new machine that will increase the production of a special component significantly. The anticipated cash flows for the project are as follows: Year 1 $1,100,000 Year 2 $1,450,000 Year 3 $1,300,000 Year 4 $950,000 You have now been tasked with providing a recommendation for the project based on the results of a Net Present Value Analysis. Assuming that the required rate of return is 15% and the initial cost of the machine is $3,000,000. 1. What is the project’s IRR? (10 pts) 2. What is the project’s NPV? (15 pts) 3. Should the company accept this project and why (or why not)? (5 pts) 4. Explain how depreciation will affect the present value of the project. (10 pts) 5. Provide examples of at least one of the following as it relates to the project: (5 pts each) a. Sunk Cost b. Opportunity cost c. Erosion 6. Explain how you would conduct a scenario and sensitivity analysis of the project. What would be some project-specific risks and market risks related to this project?......

Words: 2675 - Pages: 11

...Course Project – Part I Introduction The Course Project is an opportunity for you to apply concepts learned to a real-life simulation experience. Throughout the Course Project, you will assume that you work as a financial analyst for AirJet Best Parts, Inc. The Course Project is provided in two parts as follows: Part I – In Part I, you work with AirJet Best Parts, Inc. staff to identify the best loan options, as well as to valuate stocks and bonds. Part II – In Part II, you will provide the company with a recommendation for purchasing a new machine. You will base your recommendation on the Net Present Value (NPV) of the capital investment project using the cost of capital (WACC) as your discount rate. About AirJet Best Parts, Inc. AirJet Best Parts, Inc. is a company dedicated to the design and manufacturing of aviation and airplane technologies and parts. The company has commercial and military clients worldwide. Task 1: Assessing loan options for AirJet Best Parts, Inc. The company needs to finance $8,000,000 for a new factory in Mexico. The funds will be obtained through a commercial loan and by issuing corporate bonds. Here is some of the information regarding the APRs offered by two well-known commercial banks. Bank APR Number of Times Compounded National First Prime Rate + 6.75% Semiannually Regions Best 13.17 Monthly Assuming that AirJet Parts, Inc. is considering loans from National First and Regions Best, what are the EARs for these two......

Words: 1268 - Pages: 6

...Formal Proposal Submission Assignment Go to the http://fbo.gov 1. Search for an opportunities within a 90 day period and select any opportunity of your choice. 2. Include the solicitation Number and Contract Award date. 3. Submit a formal written proposal in response to the opportunity that you have selected. Evaluation Criteria Technical merit is substantially more important than price in determining who will be included in the competitive range. As proposals become more technically equal, price will take on greater significance. The Government will select the top 3-5 Offers, considering the following evaluation criteria, listed in descending order of importance. * Technical Approach * Subject Matter Knowledge * Key Staff and Other Resources * Past Performance * Cost Written Proposal Format and Instructions Your written proposal must have a minimum of 20 pages but not exceed 25 pages in length and include the items below: * 1 Page Business Professional Cover Letter addressed to the bid contact, including your overall cost estimate (bid) for the project. * Technical Approach should be at least 5-7 pages and include a description of your management plan for the overall project. Hint: Use of PM concepts apply here! * Resumes should be summarized for the key staff that you are proposing indicating their past experience, skills and education relative to the bid selection (at least 3-5 – one page each).......

Words: 445 - Pages: 2

...Course Project – Part I Introduction The Course Project is an opportunity for you to apply concepts learned to a real-life simulation experience. Throughout the Course Project, you will assume that you work as a financial analyst for AirJet Best Parts, Inc. The Course Project is provided in two parts as follows: Part I – In Part I, you work with AirJet Best Parts, Inc. staff to identify the best loan options, as well as to valuate stocks and bonds. Part II – In Part II, you will provide the company with a recommendation for purchasing a new machine. You will base your recommendation on the Net Present Value (NPV) of the capital investment project using the cost of capital (WACC) as your discount rate. About AirJet Best Parts, Inc. AirJet Best Parts, Inc. is a company dedicated to the design and manufacturing of aviation and airplane technologies and parts. The company has commercial and military clients worldwide. Task 1: Assessing loan options for AirJet Best Parts, Inc. The company needs to finance $8,000,000 for a new factory in Mexico. The funds will be obtained through a commercial loan and by issuing corporate bonds. Here is some of the information regarding the APRs offered by two well-known commercial banks. Bank | APR | Number of Times Compounded | National First | Prime Rate + 6.75% | Semiannually | Regions Best | 13.17 | Monthly | 1. Assuming that AirJet Parts, Inc. is considering loans from National First and Regions Best, what......

Words: 789 - Pages: 4

...592 Full Course Project (Par 1 and Part 2) Purchase here http://chosecourses.com/PROJ%20592/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://chosecourses.com/PROJ%20592/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://chosecourses.com/PROJ%20592/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://chosecourses.com/PROJ%20592/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://chosecourses.com/PROJ%20592/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and......

Words: 540 - Pages: 3

...592 Full Course Project (Par 1 and Part 2) Purchase here http://chosecourses.com/PROJ%20592/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://chosecourses.com/PROJ%20592/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://chosecourses.com/PROJ%20592/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://chosecourses.com/PROJ%20592/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://chosecourses.com/PROJ%20592/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and......

Words: 295 - Pages: 2

...DeVry BUSN 379 Full Course Project (Part 1 And Part 2 Project) IF You Want To Purchase A+ Work then Click The Link Below For Instant Down Load http://www.acehomework.net/?download=devry-busn-379-full-course-project-part-1-and-part-2-project IF You Face Any Problem Then E Mail Us At JOHNMATE1122@GMAIL.COM Objective The objective of the project is applying financial analysis concepts in real-life investment scenarios. The project will be divided in two sections with Part I due at the end of Week 3 and Part II at the end of Week 6. Part I of the project will give students the opportunity to use valuation and time value of money techniques to evaluate stocks and bonds under different market conditions. Part II of the project will require students to incorporate the concepts of cost of capital, capital budgeting and capital structure in evaluating a specific capital investment project using the Net Present Value approach. Both Part I and II will include calculations, as well as a written analysis about the results and implications of these calculations. • For detailed instructions and requirements about Part I of this course project, click here. • For detailed instructions and requirements about Part II of this course project, click here. Guidelines • The project is subdivided in Tasks. Part I contains Tasks 1, 2 and 3 and is due at the end of Week 3. Part II contains Task 4 and 5 and is due at the end of Week 6. • Present all your calculations and formulas......

Words: 2149 - Pages: 9

...PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 To purchase this visit following link: http://www.activitymode.com/product/proj-592-full-course-project-part-1-and-part-2/ Contact us at: SUPPORT@ACTIVITYMODE.COM PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 PROJ 592 Full Course Project Part 1 and Part 2 PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) Activity mode aims to provide quality study notes and tutorials to the students of PROJ 592 Full Course Project Part 1 and Part 2 in order to ace their studies. PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 To purchase this visit following link: http://www.activitymode.com/product/proj-592-full-course-project-part-1-and-part-2/ Contact us at: SUPPORT@ACTIVITYMODE.COM PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 PROJ 592 Full Course Project Part 1 and Part 2 PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) Activity mode aims to provide quality study notes and tutorials to the students of PROJ 592 Full Course Project Part 1 and Part 2 in order to ace their studies. PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 To purchase this visit following link: http://www.activitymode.com/product/proj-592-full-course-project-part-1-and-part-2/ Contact us at: SUPPORT@ACTIVITYMODE.COM PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 PROJ 592 Full Course Project Part 1 and Part 2 PROJ 592 Week 4 Course Project, Part 1......

Words: 643 - Pages: 3

...PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://devrycourse.com/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://devrycourse.com/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://devrycourse.com/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://devrycourse.com/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase here http://devrycourse.com/proj-592-full-course-project-par-1-and-part-2 Product Description PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 Full Course Project (Par 1 and Part 2) Purchase......

Words: 800 - Pages: 4

...PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 To Purchase this tutorial visit following link http://wiseamerican.us/product/proj-592-full-course-project-part-1-part-2/ Contact us at: SUPPORT@WISEAMERICAN.US PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2 (C-P2) PROJ 592 FULL COURSE PROJECT PART 1 AND PART 2 PROJ 592 Week 4 Course Project, Part 1 (CP-1) PROJ 592 Week 7 Course Project, Part 2......

Words: 577 - Pages: 3

...BUSN379 Course Project Part 1 Task 1: Assessing loan options for AirJet Best Parts, Inc. 1. Regions Best (1+ .1317/12)^12 -1 =0.14 EAR = 14% National First (1+ (6.75+3.25)/2)^2 -1 =.1025 EAR = 10.25% 2. Based on my calculations I would choose the National First loan because the EAR is only 10.25%. The EAR for the Regions Best loan is 14%. The ideal EAR for the company would be the smallest rate. 3. (1+8.6/12)^12 -1 = 8.95%. Monthly payment 8.95% of $6,950,000 = $622,025. By taking a smaller amount loan will save them money that they will need to pay back in the end. If they don’t borrow enough they may end up closing because they ran out of money to get their feet off the ground. It all comes down to saving money now and taking that chance of starting quickly, or spending money now to get the factory set up and make money later. Task 2: Evaluating Competitor’s Stock 1. Lockheed Martin Corporation as of May 12, 2012 Price: 85.21 Dividend: 4.00 Rate of Return 4*(1+.05)/85.21 + .05 =.1204 =12.04% 2. Current Share Price Rate of Return = 12.04% 1.50*(1+.01) / (.1204-.01) =$13.72 3. Preferred Stock Price 1.5 / .1204 =$12.46 I would assume that the stockholder would want the current price to be higher than the preferred price because that would mean the stock is doing better than projected to be...

Words: 521 - Pages: 3