Assignment 2 – Due: Sunday, Midnight of Week 10 (22.5% of Final Grade)
demonstrate your understanding of capital investment techniques by evaluating the following three case studies. In addition to your calculations for each scenario, you should submit a Word document in which you respond to the questions in each scenario.
Case Analysis 1 (Weight 20% of Total Assignment)
You work for a small, local telecommunications company. In five years, the company plans to undertake a major upgrade to its servers and other IT infrastructure. Management estimates that it will need up to $450,000 to cover all related costs; however, as a fairly young company, the goal is to pay for the upgrade with cash and not to take out loans. Right now, you have $300,000 in a bank account established for Capital Investments. This account pays 4% interest, compounded annually. A member of the finance department has approached you with an investment opportunity for the $300,000 that covers a five-year period and has the following projected after-tax cash flows: