MG670-144 Managerial Finance: Capital Budgeting Techniques Analysis

This assignment analyzes a capital budgeting project for Primus Corp, which is considering expanding its production capacity. The analysis focuses on determining the financial viability of the project by calculating the Payback Period, Net Present Value (NPV), and Internal Rate of Return (IRR). The solution calculates a positive NPV, indicating the project is acceptable, and an IRR of 20.33%, which suggests the project is financially sound. Based on these financial metrics, the assignment concludes that the project should be accepted as it is financially viable. The assignment references key concepts from Chapter 10 of 'Fundamentals of Corporate Finance,' including the importance of capital budgeting decisions, and the use of NPV, IRR, and payback period as evaluation tools. The assignment emphasizes that capital budgeting decisions are crucial for increasing firm value and involve significant cash outlays, making systematic analysis essential.

Running head: CAPITAL BUDGETING
Capital budgeting
Name of the student
Name of the university
Student ID
Author note

1
CAPITAL BUDGETING
Table of Contents
a. Payback Period.........................................................................................................................2
b. NPV..........................................................................................................................................2
c. IRR...........................................................................................................................................3
Recommendation.............................................................................................................................3
Bibilography....................................................................................................................................4

2
CAPITAL BUDGETING
a. Payback Period
b. NPV

3
CAPITAL BUDGETING
c. IRR
Recommendation
As the company Primus corp is planning to conver to enhance the production capacity by
moving from the wearhouse to plant, it should be mandatory to test its project financially viable
or not. Therefore the resultant NPV is positive, as the rules says if NPV> 0 then, the project
could be accepted. Also according to the concept of IRR, it is such rate which make NPV= 0,
here our calculated IRR is 20.33%, if we use this rate as a discount rate in NPV that will make
zero. Therefore based on the above analysis, we could say the estimated project should be
accepted, it is financially viable.

4
CAPITAL BUDGETING
Bibilography
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usage bias of envelope glycoprotein genes in nuclear polyhedrosis virus (NPV) and its relation to
evolution. BMC genomics, 17(1), 677.
Kulakov, N. Y., & Kastro, A. N. B. (2017). New applications of the IRR Method in the
Evaluation of investment Projects. In IIE Annual Conference. Proceedings (pp. 464-469).
Institute of Industrial and Systems Engineers (IISE).
Rossi, M. (2015). The use of capital budgeting techniques: an outlook from Italy. International
Journal of Management Practice, 8(1), 43-56.