Capital Budgeting Analysis

Task Description

Topics: 

(8) Investing in Long-Term Assets: Capital Budgeting Analysis

? Identify and calculate a project’s relevant cash flows

? Conduct capital budgeting analysis with criteria such as payback, NPV, IRR & MIRR

? Discuss the strength and weakness of the commonly used real investment proposal analysis techniques

? Discuss how project risk is measured in different settings

(9) Capital Structure and Dividend Policy

? Define and differentiate operating leverage and financial leverage

? Discuss the impact of financial leverage on cost of capital components

? Calculate cost of equity of a levered company

? Discuss the analytical framework used to determine the optimal capital structure

? Explain why firms have different capital structures

? Discuss the trade-offs companies face when establishing their optimal dividend policies

Note for Success

• Think about writing your paper as if you are sharing with a novice in Finance. 
• Do not throw out jargons. Explain with simple language.
• Use narratives to present thoughts and discussions. The essay should not be a bullet list of concepts, equations, and theories.
• You may agree or disagree with what the textbook or course material says. That is why the writing should not be a summary of the textbook. Instead, it should be your reflection on the chosen topic from the perspective of investor or financial decision maker.
• Copy-and-paste of existing work, including but not limited to textbooks, is not allowed.
  • Submission will be checked by Turnitin for matches to existing work.
  • If plagiarism is identified, it will be reported to the Dean of Students, and the student will receive F grade for FIN304 class.