Capital Budgeting at Apple Inc Assignment

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Capital Budgeting at Apple Inc Assignment
You have recently assumed the role of CFO at Apple. The Apple’s CEO is looking to expand its operations by investing in new property, plant, and equipment. You are asked to do some capital budgeting analysis that will determine whether the company should invest in these new plant assets.
Signature Assignment Parameters
The company selected is Apple.
The parameters for the week 7 project deliverable are as follows. Download the company’s most recent 10-K report.
• The firm is looking to expand its operations by 10% of the firm’s net property, plant, and equipment. (Calculate this amount by taking 10% of the property, plant, and equipment figure that appears on the firm’s balance sheet.)
• The estimated life of this new property, plant, and equipment will be 12 years. The salvage value of the equipment will be 5% of the property, plant and equipment’s cost.
• The annual EBIT for this new project will be 18% of the project’s cost.
• The company will use the straight-line method to depreciate this equipment. Also assume that there will be no increases in net working capital each year. Use 35% as the tax rate in this project.
• The hurdle rate for this project will be the WACC that you are able to find on a financial website, such as Gurufocus.com. If you are unable to find the WACC for a company, contact your instructor. He or she will assign you a WACC rate.
Signature Assignment Deliverables
Prepare a PowerPoint presentation that will highlight the following items. Use the comments/note section to write more information in regards to the slide if needed.
• Slide 1: Your calculations for the amount of property, plant, and equipment and the annual depreciation for the project
• Slide 2: Your calculations that convert the project’s EBIT to free cash flow for the 12 years of the project.
• Slide 3: The following capital budgeting results for the project
o Net present value
o Internal rate of return
o Discounted payback period.
• Slide 4: Your discussion of the results that you calculated above, including a recommendation for acceptance or rejection of the project
Once again, you may embed your Excel spreadsheets into your document. Be sure to follow APA standards for this project.

Grading Rubric

1. Calculation of Cost of project – Cost of Property, plant and Equipment and annual depreciation correctly calculated.

2. Estimation of Cash flows – Cash flows are properly converted from accrual-based net income to cash flows from the project.

3. Capital Budgeting Analysis – All of the NPV, IRR, and Discounted Payback period calculations are correct.

4. Preparation of power point Slides – Virtually no errors in writing or presentation.