1 RUNNING HEAD: Genesis Energy Capital Plan Report 2 Genesis Energy Capital Plan Report Genesis Energy Capital Plan Report Module 5 Assignment 2 Argosy University Online Katrina Caver The decision on capital outlays is among the most significant a firm has to make. A decision to build a new plant or expand into a foreign market may influence the performance of the firm over the next ten years. The capital budgeting decision includes the planning of expenditures for a project with a life of at least one year and usually considerably longer. Capital budgeting assists with the decision making of how a firm should invest its capital. Different capital budgeting alternatives that are used includes the payback period, which calculates the amount of time it will take before the cumulative net cash flows are equal to the initial cost of the investment (Argosy Online University, 2012); accounting rate of return (return on investment, An indicator of profitability that is measured by dividing the accounting net income by the amount invested (AccountingCoach, 2004-2015)); discounted payback period(examines the time that is required to cover the investment of the project considering the present value of all the cash inflows); net present value(measures the present value of all the cash inflow from the project and compare the same with the initial investment); profitability index(measures the present value of cash inflows at the required rate of cash inflows at the rate of return that is required to for the initial cash outflow for the investment. However, if the present value of cash inflows is positive, then the project is accepted; if the project is negative, then the project is not accepted. Upon evaluating the capital budget, the outcomes include cost of debt at eight percent, cost of equity at ten percent, short-term interest rate at eight percent, long-term interest rate at nine percent, and long-term equity interest rate at ten percent. Operating projections for a project is utilized to establish a forecast for cash flows that would underpin calculations of net present value, internal rates of return, payback period, and other investment metrics. The purpose of forecasting cash flows is to capture the incremental effect of a proposed project. Each project’s cash flow forecasts does not include depreciation expenses and cost that would be incurred regardless of whether a given project was undertaken or not. High, medium, and low risks categories for each division were associated with a corresponding discount rate set by the capital budgeting committee in consultation with the corporate treasurer. The weighted average cost of capital is another method to evaluate proposed projects and capital budgeting. By computing a weighted average, the company can decide the interest for every dollar that is invested. Cost of capital assist with the determination of the minimum rate of return a company is expected to make from the project. Wei.

1. 1
RUNNING HEAD: Genesis Energy Capital Plan Report
2
Genesis Energy Capital Plan Report
Genesis Energy Capital Plan Report
Module 5 Assignment 2
Argosy University Online
Katrina Caver
The decision on capital outlays is among the most significant a
firm has to make. A decision to build a new plant or expand into
a foreign market may influence the performance of the firm over
the next ten years. The capital budgeting decision includes the
planning of expenditures for a project with a life of at least one
year and usually considerably longer. Capital budgeting assists
with the decision making of how a firm should invest its capital.
Different capital budgeting alternatives that are used includes
the payback period, which calculates the amount of time it will

2. take before the cumulative net cash flows are equal to the initial
cost of the investment (Argosy Online University, 2012);
accounting rate of return (return on investment, An indicator of
profitability that is measured by dividing the accounting net
income by the amount invested (AccountingCoach, 2004-2015));
discounted payback period(examines the time that is required to
cover the investment of the project considering the present
value of all the cash inflows); net present value(measures the
present value of all the cash inflow from the project and
compare the same with the initial investment); profitability
index(measures the present value of cash inflows at the required
rate of cash inflows at the rate of return that is required to for
the initial cash outflow for the investment. However, if the
present value of cash inflows is positive, then the project is
accepted; if the project is negative, then the project is not
accepted.
Upon evaluating the capital budget, the outcomes include cost
of debt at eight percent, cost of equity at ten percent, short-term
interest rate at eight percent, long-term interest rate at nine
percent, and long-term equity interest rate at ten percent.
Operating projections for a project is utilized to establish a
forecast for cash flows that would underpin calculations of net
present value, internal rates of return, payback period, and other
investment metrics. The purpose of forecasting cash flows is to
capture the incremental effect of a proposed project. Each
project’s cash flow forecasts does not include depreciation
expenses and cost that would be incurred regardless of whether
a given project was undertaken or not. High, medium, and low
risks categories for each division were associated with a
corresponding discount rate set by the capital budgeting
committee in consultation with the corporate treasurer.
The weighted average cost of capital is another method to
evaluate proposed projects and capital budgeting. By computing
a weighted average, the company can decide the interest for
every dollar that is invested. Cost of capital assist with the
determination of the minimum rate of return a company is

3. expected to make from the project. Weighted average cost of
capital is the weighted average of different components. Proper
changes needed to be made based on the risk of the project. If a
project is riskier than normal projects, increase the WACC can
be increased; but if it is less risky, decrease the WACC. There
is an allowance for multiple risk factors in the WACC
(Brigham, 2004). The WACC would be different if it is
computed in the form of retained profits as compared to the
form of equity. The dividend policy also impacts WACC.
Weighted average cost of capital can be thought of as the rate of
return that is required by the suppliers of capital to attract their
funds to the firm. If the risk is held constant, projects with a
rate of return above the cost of capital will increase the value of
the firm. Richard (2003) states, “ Weighted average cost of
capital calculated on the cost of different long-term financing of
the company to the proportion of the respective finance held by
the company.” There are a few components that is involved with
determining the weighted average cost of capital are cost of
debt (the cost that creditors of the firm demand on their
borrowings); cost of preferred stock (determined by the
dividend paid/the present value of the stock); and cost of equity
(computed by the dividend growth model as well as through
CAPM). Previously, we discussed the two models that include
the CAPM model and the dividend growth approach. The cost of
retained profits don’t include any flotation cost, which is
included in the cost of capital of common stock when the new
shares are issued. Based upon all computations of all
components, the cost of capital for the company is 9.43%.
With all projects, we can state that Project C is determined to be
the best choice, which results in the highest net present value of
$2083.18, internal rate of return seventeen percent, and the
payback period of 6.25 years. For the proposed project, it has
three equipments. The company has three different categories,
which includes automatic, semi-automatic, and manual. Upon
examining the cash flows of the projects, equipment 1 obtains
the highest net present value of $1665.69, internal rate of return

4. thirty-three percent, and a payback period of 5 years. Equipment
1 would be considered an acceptable solution. Unlike equipment
1, the company has two option (standard or top of line) should
not choose equipment 2, which has net present value $2998.42
and internal rate of return twenty-nine percent. For equipment
3, the company has three options. Even though the three
equipments give negative returns, the three-man machine has
the lowest negative return, and therefore, it should be an
acceptable option. As a word of advice, the company should
consider monitoring all financial and non-financial
performances, which can be accomplished by using a scorecard.
“The balanced scorecard supplemented traditional financial
measures with criteria that measured performance from three
additional perspectives—those of customers, internal business
processes, and learning and growth”, (Kaplan & Norton, 2007).
This can assist with improvement of reaching a net present
value of $1452.17 as compared to a net present value of $635.89
from the contract overview. Utilizing a balanced scorecard,
which includes perspectives, which is listed in the chart below,
can complete the measuring of performances. Once again, the
company will be eligible to review performances of all
components and see which areas needs adjustments. After this
thorough examination, the company should consider following
the strategic operating plan.
Project Summary
NPV
IRR
Payback Peroid
Rank
Project A: 25-emp facility

5. 107.41
10%
7.30
3
Project B: 40-emp facility
1437.76
16%
6.33
2
Project C: 75-emp facility
2083.18
17%
6.25
1
Equipment 1 - fully automatic
1012.43
18%
5.88
3
Equipment 1 - semi-automatic
825.04
19%
5.75
2
Equipment 1 - manual
1665.69
33%
5
1

6. Equipment 2 - Standard
1479.52
28%
4.92
2
Equipment 2 - top of line
2997.42
29%
5.77
1
Equipment 3 - 3-man machine
-384.97
-4%
1
Equipment 3 - 2-man machine
-476.31
-13%
3
Equipment 3 - 5-man machine
-428.35
-4%
2

7. In-house inspection
1452.17
22%
5.13
1
Contract inspection
635.89
2
Total Investment
Amount of
Investment
Project C: 75-emp facility
$3,000
Equipment 1 – manual
$750
Equipment 2 – Standard
800
Equipment 3 - 3-man machine
$700
In-house inspection
$1,800
Total Investment required for Capital Expenditure
$7,050
Increase in net income

8. 15%
Increase in Dividend Payout
15%
Customer Perspective
Increase in Customer Satisfaction
95%
Increase in Customer Base
20%
Internal Process Perspective
Improved Quality
85%
Decrease in Operating Cost
12%
Increase in Productivity and Efficiency
25%
Learning and Growth Perspective
Decrease in Employee Turnover
65%
Increase in Employee Morale
75%
References
Accounting Coach. (2004-2015). Accounting rate of return.
Retrieved from

9. http://www.accountingcoach.com/search?q=accounting++rate+o
f+return
Argosy University Online. (2012) Financial Management:
Module 5 Payback period. Retrieved from
http://myeclassonline.com
Brigham, E.F. & Houston, J.F. (2004). Fundamental of financial
management, Cenage Learning.
Kaplan, R.S. & Norton, D.P. (2007). Using the balanced
scorecard as a strategic management system. Retrieved from
https://hbr.org/2007/07/using-the-balanced-scorecard-as-a-
strategic-management-system
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RUNNING HEAD: Genesis Expansion Planning
2
Genesis Project Planning
Genesis Expansion Planning
Katrina Caver
Argosy University Online
Author Note:
Financial Management B6022-P A01, Genesis Project Planning

10. 1. Describe the financial environment at Genesis.
Genesis Company develops high-technical software for
commercial and military services. Genesis currently works in
the USA and thinking about extending its business to other
countries besides to Canada. However, in order for Genesis to
meet its demand, it must expand. In order to expand and do
globally do business, the company will need to make
investments and finance. Every country will need financial
assistance in order to expand; therefore, based on Genesis
report, the company doesn’t have a very strong financial
background.
2. Describe how the company’s strategy for financing as a
startup may no longer be suitable as it seeks to expand its
operations globally.
Currently, Genesis has two financing choices available, which
are not very effective in its expansion. Rapid revenue growth,
the operating expansion, new international clients, and the
involvement of more professional ownership made it necessary
for an expansion of the management team (Dizik, 2013). In
order to speed up the project, the company will need to seek the
funds as needed, which requires the management to seek
investors and allow them to see how much funding can be
invested. Expenditure can include the costs of recruiting human
resources, and other costs involving the new locations.
3. Identify and explain two ways Genesis can improve its
strategy.
Genesis can improve its operations by updating its strategies for
its project. In order for Genesis to be able to assist with the
investment process for its international suppliers by getting
more professional owners along with improving its management
team. By getting professionals, it can allow Genesis the
opportunity for stakes, which can results in financial inputs for
the company increasing. The company reaches its goals by
expanding at a faster rate. According to Dizik (2013) the

11. management teams can make improvements with the overseeing
of domestic and international operating facilities that contains
of a general operations’ managers, software experts, marketing
managers, production managers, and customer service managers.
All persons that listed were outside hires, except production
managers.
4. Explain how global financial markets in terms of financial
strategy affect Genesis.
Global markets can impact its financial strategy in various
ways. Companies seek financial benefits from global markets on
the basis of its financial support. Genesis request for support
from its global side may not assist due to absence of an
effective financial plan.
References
Dizik, A. (2013). Ten questions to ask before expanding
overseas. Retrieved from http://www.entrepreneur.com:
http://www.entrepreneur.com/article/226517