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Capital Budgeting Simulation and Mini-Case University of Phoenix FIN/540 Managerial Accounting and Finance Foundations Instructor: Richard Richins June 22, 2005 Workshop 6 Capital Budgeting (I) Based on items (a) through (h), which company would you recommend acquiring? We recommend the acquisition of Corporation B. (J) Define, analyze and interpret the answers to items ( c) through (h). Present the rationale behind each item and why it supports your decision stated in item (i). Also, attempt to describe the relationship between NPV and IRR. Also explain how you would analyze projects differently if they had unequal projected years (i.e., if Corporation A had a 5 year projection and Corporation B had a 7 year projection). Net Present Value (NPV) - Present value of cash inflows minus present value of cash outflows. Investment rule - Accept project if NPV is positive. For mutually exclusive projects, choose the one with...


