Three-part assignment: All parts must be at least 200 words unless otherwise noted. Please read all attachments and follow ALL instructions.Part 1: Factors in Capital Budget Decisions
Imagine you are a representative of management in the company you have selected (Apple) for your Week 6 Assignment and you must make a capital budgeting decision. The decision is to implement a new computer network system to decrease the time between customer order and delivery. The cost will be 10% of last year’s profits. You are charged with describing the important considerations in the decision-making process to upper management. In your response, be sure to include the following:A description of the important factors, in addition to quantitative factors, that were considered when making this capital budgeting decision.
An explanation of how these factors are significant to the company.
A summary of how you will determine the criteria to rank capital budgeting decisions and whether some criteria are more important than others.
A calculation of the proposed return on investment based on criteria you select and justification for that ROI.Develop a 200 word explanation supporting your recommendations.Tip: For help with reading an annual report access this handy guide from Money Chimp (http://www.moneychimp.com/articles/financials/fundamentals.htm)Part 2: Risk Identification and Mitigation
Revisit the company (Apple) you chose for your Week 6 Final Project. Using the annual report and other sources such as a 10k or 10q’s, discuss the dividend policy of your company.Answer the following questions as part of your response:How would you describe your chosen company’s dividend policy?
Why do you believe this company chose the dividend policy they have in place?
Do you agree or disagree that they have selected the best dividend policy for the company?
How might this dividend policy function in both perfect and imperfect capital markets?
Calculate the dividend rate over the past 5 years. Define why you believe that it has or has not changed over the last 5 years.Support your position with evidence from the text or external sources.
Your post should be 200-words in length.Part 3: Capital Budgeting and Dividend Policy
We examined two very important topics in finance this week; Capital Budgeting and Dividend Policy.Critically reflect on the importance of selecting the right projects in which to invest capital. Do we always select those projects that have the highest return on investment? What other factors play into capital budgeting decisions?
We also looked at dividend policy. What incentive is there for a company to pay dividends? What signals does dividend policy provide to investors?Required Resources
Text
Byrd, J., Hickman, K., & McPherson, M. (2013). Managerial finance [Electronic version]. Retrieved from https://content.ashford.edu/· Chapter 9: Capital Structure
· Chapter 10: Dividend PolicyRecommended Resources
Articles
Mergent. (n.d.). Mergent Online Quick Tips . Mergent Online. Retrieved from Online Ashford Library.Mergent Database for Company and Industry Research.
To access go to the Ashford Library and select “Find Articles and More” in the top menu panel. Next, select “Databases A-Z” and go to section “M” for “Mergent”.Modigliani & Merton (1958). The Cost of Capital, Corporation Finance, and the Theory of Investment. American Economic Review, 261 – 297. Retrieved from ProQuest database.Website
Moneychimp . http://www.moneychimp.com/articles/financials/fundamentals.htm
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Factors in Capital Budget Decisions/Risk Identification and Mitigation/Capital Budgeting and Dividend Policy
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