The goal of this assignment is to understand the principles of project valuation and capital budgeting in a practical setting, using a combination of

The goal of this assignment is to understand the principles of project valuation and capital budgeting in a practical setting, using a combination of fictitious data and real-world examples. Begin by proposing a fictitious project for a hypothetical company. This can be any type of project-expanding a product line, launching a new service, entering a new market, etc. Provide a brief overview of the project, including the expected benefits, the target market, and any initial capital requirements. Complete the following steps in your journal:

  • Cost of capital analysis: Identify the different types of capital the hypothetical company would need for the project. Estimate the cost of debt, preferred stock, and common stock using assumptions based on typical industry figures. Justify your assumptions. Apply the dividend growth model where relevant and calculate the company’s weighted average cost of capital (WACC).
  • Capital budgeting and cash flows: Categorize your project (e.g., replacement projects, expansion projects). Lay out the expected cash flows for the project for a defined period (for example, 5 years). Calculate the net present value, internal rate of return, and profitability index of your project. Estimate the payback period for your project.
  • Real-world comparison: Use the CSU Online Library to research at least two real-world project valuation cases relevant to your fictitious project or industry. Compare the financial metrics (e.g., NPV, IRR, payback period) of these real-world projects to your fictitious project. Discuss any significant deviations between your project and the real-world examples.
  • Reflection and conclusion: Reflect on the data-driven decisions you made throughout your fictitious project’s proposal and financial feasibility analysis. Document these decisions in your journal. Summarize key learning points and any potential managerial issues that may arise during the real-world implementation of such a project.

Use tables, charts, or graphs to present your data and financial calculations wherever applicable. Ensure that your journal has a clear structure, with distinct sections for the proposal, cost of capital analysis, capital budgeting and cash flows, real-world comparison, and reflection and conclusion. Remember, the purpose of this assignment is not just to perform financial calculations, but to critically think about the feasibility of projects and make informed, data-driven decisions.

Your journal should be between 1,500 to 2,500 words. All sources, including the real-world project valuation cases, should be properly cited in APA Style. Submit your assignment as a single document (e.g., Word or PDF).

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