Capital Budgeting For EcoVero Assignment Answer

If you are studying an accounting course, then you need to be aware of what capital budgeting is and how you can calculate it. That is why accounting students are asked to write capital budgeting assignment answers. Are you looking for the assignment answers for EcoVero project? Then accounting assignment helpexperts at My Assignment Services are going to aid you.

This question has a long case study attached to it but let's not go there. I do not think you are interested in understanding the case study. Yet, if there is anyone up for that, you can contact me for expert consultation.

Here is the list of questions that I solved for my EcoVero project assignment answer

You can see that the questions are straight forward with what you need to do in the assignment. I am going to explain each question one by one along with how I solved it.

Question 1 wants you to calculate cash flow

Calculating cash flow for a project can be a headache if not done properly. To calculate the incremental cash flow of the EcoVero project, you need to first identify what is the cash flow from the new products.

When you do that, you need to calculate the sale of regional viscoes. Calculating regional viscoesis done so that you can calculate the sale of viscoes with EcoVero. Once done, subtract the total change from the cash flow of new product which will give you the incremental cash flow.

Students note that we have not used the cost of furniture. Why? Because the furniture once bought is now a sunk cost. There is nothing you can do about that. So, its effect on capital budgeting is nothing.

Just so that you get an idea of what the incremental cash flow will be, I am attaching a sample from my EcoVero capital budgeting assignment answer.

This concludes your first answer.

1.For question 2, you need to calculate the NPV, IRR and discounted payback period

You should first know what NPV, IRR and Discounted Payback Period is.

NPV or Net Present Value is the difference between the total cash flow into the organisation and the total cash flow out of the organisation. In layman terms, you can say that NPV is the difference between revenue and expenditure. But to calculate the NPV, you have to do more than just subtract two figures. This is the formula for calculating the NPV -

Rt is the difference of cash inflow and outflow for a time t

i is the discount rate

Similarly, you calculate the IRR or Internal Rate of Return. Companies use IRR to identify how profitable investment is. The IRR formula is -

Ct is the total cash flow into the organisation during a time period t

Co is the total initial investment costs

r is the discount rate

The numbers will look like this -

But this is not the end. You also have to suggest that if the company should undertake the EcoVero project or not, with valid reason. Oh, and remember that you use the above formulas only to verify the result generated from MS Excel.

2.In the end, you have to calculate the financial break-even point

Again, you need to use the MS Excel software and use the functions like goal seek and others. And if you are doing that, I can help you by giving the sample of break-even point from my EcoVero capital budgeting assignment answer.

How did I come to this answer? Well, for that, you would need to consult me for a personalised sessionfor writing accounting assignment.

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