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April 10, 2020
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Acme Engineering is evaluating 10 project

Instructions:

  • Read the case below and answer all four questions at the end of the case.
  • Show all work when comparing alternatives and using calculated values.
  • Submit your answers on a Word (.doc), Excel (.xls), or PDF (.pdf) document

Acme Engineering is evaluating 10 projects for next year’s capital budget investments.  Their corporate MARR is set at 12% and all projects have a 10-year life:

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Project Initial Cost (thousands) Annual Benefit (thousands)
1 $50 $10.3
2 $150 $32.2
3 $100 $17.7
4 $300 $48.8
5 $50 $11.9
6 $200 $38.3
7 $50 $10.0
8 $200 $36.9
9 $50 $11.5
10 $100 $22.3
  1. Calculate the IRR for every project
  2. If money is not a problem which projects should be approved?
  3. Rank order all the acceptable projects according to IRR
  4. If only $450,00 is available for the budget which projects should be approved?

Rubric

Capital Budgeting Case

Capital Budgeting Case
Criteria Ratings Pts
This criterion is linked to a Learning OutcomeCalculate IRR for all proyects 35.0 pts Full Marks 0.0 pts No Marks 35.0 pts
This criterion is linked to a Learning OutcomeProjects to be Approved 35.0 pts Full Marks 0.0 pts No Marks 35.0 pts
This criterion is linked to a Learning OutcomeRank Order According to IRR 35.0 pts Full Marks 0.0 pts No Marks 35.0 pts
This criterion is linked to a Learning OutcomeProyects to be approved with $450,000 budget 35.0 pts Full Marks 0.0 pts No Marks 35.0 pts
This criterion is linked to a Learning OutcomeProfessional Presentation 15.0 pts Full Marks 0.0 pts No Marks 15.0 pts
Total Points: 155.0

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