A new product manager presents to you, the Chief Financial Officer, a proposal to expand operations that includes the purchase of a new machine.
There are two parts to this Assessment.
Introduction: The Assessment requires the application of the Net Present Value (NPV) model to assess investment options given cost of capital, commonly referred to as discount rates, and required rates of returns. You will explain the role of a discount rate in evaluating the NPV model and compare investment options as cost of capital increases or decreases.
The use of a financial calculator will be required in this Assessment. Both Parts 1 and 2 will be submitted to the same Dropbox.
This part of the Competency Assessment assesses the following outcomes:
MT480M4: Assess investment options based upon cost of capital and expected returns.
Assessment Part 1:
Read the scenario and address all of the checklist items.
Scenario: A new product manager presents to you, the Chief Financial Officer, a proposal to expand operations that includes the purchase of a new machine. The product manager is certain that the positive cash flows, which exceed the initial outlay by $20,000 by the end of year 4, will bring both praise and approval. You explain the company uses a 12% discount rate for cash flows and project related budgeting. You take the time to present the details of the Net Present Value (NPV) model used to assess product proposals. The data is below.
Project Outflows to Buy Machine
Day 1 Cash Out -$70,000 12% discount rate applied.
End Year 1 Cash Repayment $10,000
End Year 2 Cash Repayment $20,000
End Year 3 Cash Repayment $30,000
End Year 4 Cash Repayment $30,000
To educate the new manager, and as CFO, you take the time to evaluate the following:
Submit a 2–3 page paper with an additional title page in APA format. Please label your Assessment submission as “MT480-M4_Part1_your name” and submit it to the Competency Assessment Dropbox together with MT480-M4_Part 2_your name assessment (as seen detailed below).
Note: See Part 2 for the entire Assessment rubric.
Minimum Submission Requirements
If work submitted for this competency assessment does not meet the minimum submission requirements, it will be returned without being scored.
Plagiarism is an act of academic dishonesty. It violates the University Honor Code, and the offense is subject to disciplinary action. You are expected to be the sole author of your work. Use of another person’s work or ideas must be accompanied by specific citations and references. Whether the action is intentional or not, it still constitutes plagiarism.
Assessment Part 2:
This Competency Assessment assesses the following outcome(s):
GEL- 7.02: Apply ethical reasoning to ethical issues within the field of study.
As legal considerations in the financial world are often changing, the managers need to be aware of current as well as pending legislation to stay up-to-date with compliance issues. In addition, consumers and executive boards are scrutinizing ethical considerations more rigorously. In this Assessment you will review legislation as well as examine ethical considerations to apply them to a scenario.
Prior to the passing of the Tax Cuts and Jobs Act (2017) some of America’s largest corporations were able to apply questionable, yet legal, schemes to book profits in offshore accounts to avoid (not evade) higher levels of tax expense. These tax savings were substantial; it is estimated multinational corporations had been able to avoid an estimated $90 billion in federal income taxes each year.
Scenario: The Board of Directors, shareholders, and stakeholders are just now learning that the corporation employed offshore banking transactions to minimize tax burdens.
Checklist: As the Chief Financial Officer (CFO) address the following items:
Access the rubric
Tax Cuts and Jobs Act. 115 Cong., P.L. 115-97 (2017). Retrieved from https://www.congress.gov/bill/115th-congress/house-bill/1