1. Describe and evaluate Harley’s operations strategy (using the framework of Chapter 1) It is helpful to adopt three different yet complementary views of operations strategy: The resource view of operations comprises 4 key questions: • Sizing –Due to the volatility and cyclical motorcycle business‚ Harley-Davidson attempts to expand capacity without taking on further debt. Thus‚ it would expand capacity first through internal process improvements and restructuring‚ and externally only if needed
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salvage value. Compared to this‚ the cost of branching out online grocery shopping includes up-front investments‚ additional investments and rent for warehouse. We think opening a traditional grocery store is better according to comparison of NVP‚ IRR‚ and discounted payback period. Statement As shown in the Pro-forma Income Statements‚ the relevant cash flows include Traditional Grocery Store that consists Incremental Cash Flow‚ up-front renovation costs‚ rent expense‚ salaries‚ other operating
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Capital Budgeting Case Egret Printing & Publishing Company Instructor: Mr. Sabin Bikram Panta Submitted By: Group 3 Shivshankar Yadav (12336) 9/3/2012 Theory and Case Background: The term capital budgeting refers to the process of decision making by which firms evaluate the purchase of major fixed assets‚ including building‚ machineries‚ and equipment. Capital budgeting describes the firm’s formal planning process for the acquisition and investment of capital and results in capital
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corporate governance stance has started to shift in order to include some elements of the Anglo-American way of corporate governance. It appears that a final decision has been made to build Disney Sea Park (despite unattractive ARR‚ but attractive NPV/IRR and ACFR) not only for the potential profits reaped for the company but also due to their responsibility to keep uphold the interests of its stakeholders (which would include its parent company‚ stockholders‚ landowners‚ suppliers‚ creditors‚ the
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return expected to be received from alternate investments forgone. NPV – Present value of cash flows less the cost of acquiring the asset acquire assets with positive NPV‚ positive NPV = good project Rate of Return = profit/cost or investment (good investments have higher rate of return than opportunity cost) Higher discount rate ( lower discount factor (lower NPV Investment Decision Rules: 1. accept if positive NPV 2. accept w rate of return > opp cost or hurdle rule PV = C1*
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within organizations is defined and reported. Key terms related to capital budgeting are also defined. Risk analysis based on the Net Present Value (NPV) is performed on the salvage values before and after sales tax values along with the different sale ranges. Keywords: NPV‚ NPV Profile‚ NPV‚ IRR‚ multiple IRRs‚ ranking conflict of NPV vs. IRR‚ payback period‚ profitability index‚ discount rate‚ cost of capital concept‚ cash flow analysis‚ cash flow timeline‚ conventional cash flow stream‚ non-conventional
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* NPV of Project A = -8.000.000+(2.400.000/(1‚14))+(3.000.000/(1‚14)2)+(4.000.000/(1‚14)3) +(3.200.000/(1‚14)4) +(1.800.000/(1‚14)5) = 1.943.072‚3 * NPV of Project B = -9.000.000+(3.000.000/(1‚14))+(4.000.000/(1‚14)2)+(2.500.000/(1‚14)3) +(2.000.000/(1‚14)4) +(1.200.000/(1‚14)5) = 204.281‚8 B. Determine the projects’ internal rate of return * IRR of Project A = -8.000.000+(2.400.000/(1+IRR%))+(3.000.000/(1+IRR%)2)+(4.000.000/ (1+IRR%)3) +(3.200.000/(1+IRR%)4)
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to evaluate different investments and to decide which fixed assets to purchase. In the following‚ four different methods of investment appraisal shall be discussed: accounting rate of return (ARR)‚ payback period‚ net present value (NPV) and internal rate of return (IRR). The ARR expresses the return on an investment as an annual percentage of the cost of that investment. To decide whether to accept or reject a project‚ organisations can set a minimum ARR which needs to be exceeded by the project’s
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from their earning which is huge money but even after that‚ the company is making lots of profits. 2. The 15% discount rate to calculate NPV and the Cash Flows by using that discount rate ended up with a negative NPV of $ 2‚137‚217.21. That the discount rate of 15% was out dated and insufficient. The rate of 9.62% to compute and using this number to get the NPV of $746‚981.31. I would recommend Worldwide Paper Company to use the 9.62% discount rate‚ the returns will be great only if everything remains
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This case provides insight into how capital budgeting decisions are made and the factors that influence the decision making process of large corporations. Specifically‚ the case centers on the capital expenditure meeting for the Target Corporation‚ which is one of the top ten retailers in the United States. All corporations have some version of this meeting. The goal of the meeting is to determine what capital expenditure projects the company will undertake in the future to promote growth. Below
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