Assess the relevant cash flows used to form a capital budgeting

Previously, there was an assignment on the context in which
corporations exist among the various stakeholders at issue. You were to identify three important
stakeholders for a corporation, and then explain the role that each
stakeholders plays within the corporation. Additionally, you must explain how
they influence one another.

The goal of this assignment is to extend that assignment by
writing a short paper in which you answer the following: What do you consider
as the most important stakeholder? Is it important for corporations to focus on
maximizing shareholder wealth? Explain in your own words where each of the
major stakeholders is represented within the financial statements of the
corporation. You should be able to discuss at least four major stakeholders at
this point. For example, the customers provide sales revenue and are
represented within the income statement sales revenue figures.

Your response should demonstrate thoughtful consideration of
the ideas and concepts presented in the course by providing new thoughts and
insights relating directly to this topic. Your response should reflect
scholarly writing and current APA standards where appropriate. Be sure to
adhere to Northcentral University’s Academic Integrity Policy.

Length: 1-2 pages

Create an assessment in which you address the following
problems/questions:

Assess the relevant cash flows used to form a capital
budgeting decision model. For this assignment, focus upon an expansionary
problem.
Evaluate the cost of capital (WACC) for use in a capital
budgeting decision model. Make sure to define each component of the formula.
Explain how the resulting cost of capital (WACC) is used within a capital
budgeting model. How can the Capital Asset Pricing Model contribute to this
analysis? Explain.
Weigh each of the following decision metrics that can be
used within a capital budgeting decision model: net present value, internal
rate of return, modified internal rate of return, payback period, and
discounted payback period. Explain how each metric is formed and discuss the
critical value of each in forming conclusions within a capital budgeting
decision model. Discuss which method has the strongest basis for being used and
under which conditions each might be the preferred method.
Develop a capital budgeting decision model that displays
cash flows, cost of capital, and decision metrics (i.e., npv, irr, mirr,
payback, and discounted payback). Then, form a conclusion based upon the
analysis. What are some problems with the payback period? Is NPV better than
IRR? Begin with the example problem on pages 405 and 406 of the textbook, Table
12.1. Modify the problem in the following manner, and then develop the analysis
within an Excel spreadsheet.
Assume the units sold are 2,700,000 in year 2013, and they
grow each subsequent year at 5%.
Assume each unit will sell for $2.10.
Assume the variable cost of producing each unit is 1.10.
Assume straight-line depreciation.
The cost of capital is calculated based upon funding from
retained earnings and from debt. The company is assumed to fund itself with 50%
debt and 50% retained earnings. The cost of debt capital, rD, is 7%. The cost
of capital from retained earnings, rS, is based upon the capital asset pricing
model. The risk free rate in the market
is 5% and the difference between the expected return on the market and the risk
free rate is 5%. The beta for the company is 2.0. The tax rate is assumed to be
40%.
Complete a sensitivity analysis in which you reevaluate the
model considering the selling price per unit is 1.90, 2.00, 2.10, 2.20, and
2.30. Present and comment on the
results.
Assume all other assumptions as given.
Support your paper with at least three (3) resources. In
addition to these specified resources, other appropriate scholarly resources,
including older articles, may be included. Your paper should demonstrate
thoughtful consideration of the ideas and concepts presented in the course by
providing new thoughts and insights relating directly to this topic.

Your response should reflect scholarly writing and current
APA standards. Be sure to adhere to Northcentral University’s Academic
Integrity Policy.

Length: 5-7 pages (not including title and reference pages)