Capital budgeting techniques

Great job on your last assessment in our course so far! You did a great job explaining all methods correctly. Please revise all calculations, then re-assess whether the two projects should be accepted or not based on the revised results.

Please apply my feedback below, refer to Weaver & Weston (2001) Chapter 9, highlight your changes, then resubmit your assessment for review. If you think it might be helpful, complete the calculations in Excel using the prebuilt formulas and submit the Excel spreadsheet with your next attempt.

Keep up the great work!

Dana 

COMPETENCY: Define finance terminology and its application within the business environment.

CRITERION: Calculate the internal rate or return (IRR) and modified rate or return (MIRR) for a project.

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Basic

Calculates the IRR and MIRR for a project using inaccurate or incomplete information. 

Faculty Comments:“

Both the IRR and MIRR calculations are incorrect. Please double-check the formulas against those in our textbooks, then revise the calculations! 

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CRITERION: Identify the benchmark when using net present value (NVP).

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Proficient

Identifies the benchmark when using NPV. 

Faculty Comments:“

Good job stating the benchmark for using NPV! For a distinguished level of performance, provide real-world and specific examples of using the benchmark for NPV. 

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CRITERION: Explain the payback period statistic.

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Distinguished

Analyzes the payback period statistic and connects the analysis to relevant real-world examples. 

Faculty Comments:“

Great job explaining the payback period statistic and the detailed example you provided to show its applicability! 

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CRITERION: Identify the payback period statistic acceptance benchmark.

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Analyzes the payback period acceptance benchmark and connects the analysis to relevant real-world examples. 

Faculty Comments:“

Very good job on your explanation of the payback period acceptance benchmark and the example you provided! 

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CRITERION: Calculate the net present value (NVP) for a project.

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Basic

Calculates the NPV for a project using inaccurate or incomplete information. 

Faculty Comments:“

The calculations of the NPV are incorrect. Please refer back to Weston and Weaver (2001), revise the formula, then the calculations. 

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COMPETENCY: Evaluate the financial health of an organization.

CRITERION: Explain the net present value (NVP) method for determining a capital budgeting project's desirability.

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Explains the NPV method for determining the desirability of a capital budgeting project.

Faculty Comments:“

Good job explaining the concept of NPV! Please provide specific examples of its applicability for a distinguished level of performance. 

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CRITERION: Explain whether a project should be accepted or rejected, based on the calculated IRR and MIRR.

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Basic

Explains whether a project should be accepted or rejected, based on the calculated IRR and MIRR, but omits key elements.

Faculty Comments:“

Once the calculations above are revised, please reevaluate the decision to accept or reject the project, and explain the reasoning.  

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CRITERION: Describe the internal rate of return (IRR) method for determining the desirability of a capital budgeting project.

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Describes the IRR method for determining the desirability of a capital budgeting project. 

Faculty Comments:“

Good job describing the IRR method! Please provide real-world examples of its applicability as well for a distinguished level of performance. 

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CRITERION: Identify the internal rate of return (IRR) acceptance benchmark of a capital budgeting project.

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Proficient

Identifies the IRR acceptance benchmark of a capital budgeting project. 

Faculty Comments:“

Great job identifying and explaining the IRR acceptance benchmark! Please provide practical examples as well. 

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CRITERION: Describe the modified internal rate of return (MIRR) method for determining the desirability of a capital budgeting project.

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Proficient

Describes the MIRR method for determining the desirability of a capital budgeting project.

Faculty Comments:“

Good job describing the MIRR method! Please provide an example to show your understanding of the MIRR method. 

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CRITERION: Identify the strengths and weaknesses of modified internal rate of return (MIRR).

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Proficient

Identifies the strengths and weaknesses of MIRR. 

Faculty Comments:“

Good job explaining the pros and cons of MIRR! Please provide examples as well. 

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