AUO_B6022_M6_A2_capital budget The Genesis operations (Graded A+) - use as a guide only - 25431

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The Genesis operations management team, nearing completion of its 
agreement with Sensible Essentials, was asked by senior management to present a 
capital plan for the operating expansion. The capital plan was not to be a wish 
list but an analysis of the necessary expenditures to successfully establish a 
fully equipped operating facility overseas.


In addition, senior management requested meaningful financial and 
operating metrics to ensure that the performance objectives for the facility 
were being met. The operations management team was given five days to accomplish 
the following:

  1. Calculate the firm’s WACC.
  2. Prepare and analyze each planned capital expenditure.
  3. Evaluate, rank, and recommend the capital expenditures according to 
    beneficial value to the organization, using evaluation tools NPV, payback, and 
    IRR. Evaluation, ranking, and recommendations should be by category of 
    expenditures. For example, facility, equipment 1, 2, and 3, and inspection. 
  4. Using the selected choices in part three, calculate the full cost of 
    establishing a fully equipped facility. This would include the facility, 
    equipment 1, 2, and 3, and inspection. In addition, calculate the payback, NPV, 
    and IRR for the completed facility.
  5. Construct and recommend between three and five metrics to measure the 
    performance of the organization. At least one metric should be dividend 
    decision-making driven.
  6. Prepare an executive summary along with a separate document showing the 


Following the example of the operations management team, do the 

  1. Downloadthe Capital Budgeting 
    spreadsheet, and compute the WACC for Genesis.
  2. Using the information provided in the spreadsheet, analyze Genesis’s project 
    Using the information provided, calculate the periodic and 
    cumulative net cash flows for each potential project and its associated options. 
    Please note that there are 5 projects (facility, equipment pieces 1, 2, and 3, 
    and internal inspection) and that each project offers multiple configuration 
    options (facility size, equipment type, etc.).
  3. Evaluate, rank, and recommend a specific option for each capital project 
    according to beneficial value to the organization, using evaluation tools NPV, 
    payback, and IRR.
  4. Construct and recommend between three and five metrics to measure the 
    performance of the new operating strategy. At least one metric should reflect 
    dividend policy as it relates to rewarding shareholders.
  5. Prepare an executive summary describing your recommendations for each 
    project and the overall cost, net cash flows, and expected returns of the 
    operating configuration that you recommend. Be sure to justify your 
    recommendations in terms of the investment criteria applied in Step 3 above. Be 
    sure to report the full cost of the facility as it is configured per your 
    recommendations. Present and justify your operating strategy performance 


Your complete report should include all of your calculations as 
appendices (5 pages, or 1 page for each project).


Write a 5–6-page report in Word format. Apply APA standards to 
citation of sources.

Solution Description


AUO_B6022_M6_A2_capital budget.docx