(Student assignment) team alpha – week 6 capital budgeting

1. Team Alpha –Week 6 Capital Budgeting
Kirsten Coombs, Charles James, Alicia Stevenson, Harry TharpQRB 501 –Johnnie SpragginsOctober 21, 2013

2. Capital Budgeting Case –Scenario
•Our company, Alpha Analytics, is in the position to acquire a company.
•Our budget is $250,000

3. Company A –5 Year Projected Income
•Over 5 years Company A is projected to have between a 51% to 55% net income increase.
•NPV = $223,499.39*
•IRR = 38.59%*
* Assuming growth is parallel to projection.

4. Company A –NPV & IRR

5. Company B –5 Year Projected Income
•Over 5 years Company B is projected to have between a 32% to 35% net income increase.
•NPV = $408,605.99*
•IRR = 61.57%*
* Assuming growth is parallel to projection.

6. Company B –NPV & IRR

7. Analysis
Company A
Company B

8. Decision
Based on the fact that Company B has a higher NPV and IRR, we recommend acquiring this company.

9. Questions?