capital budgeting problem attached in files below……………………………………. Document Preview:

FIN80005 Corporate Financial Management – IndividualAssignmentPrepared by Dr Mardy ChiahSemester 2, 2018The objective of this assignment is to encourage students to use Excel spread sheets to aid insolving a capital budgeting problem, and to analyse how the market impounds new informationinto stock prices. Topics 4 – 8 are particularly relevant for this assignment.Weight: 20% of total assessmentDue date: 19 October, 2018. You must submit your report, in word or PDF format, electron-ically using the assignment submission link on Canvas.Late submissions: Late assignments cannot be accepted unless a time extension has been re-quested from, and approved by, the Unit Convenor. Such requests must be made in writing viaemail prior to due date.Format: This assignment is a problem solving exercise, using Excel spreadsheets for analysis,withdiscussionof?ndings. Itshouldbewritteninareportformat. Thewordlimitofthereportis 1,500 words (approximately 1,000 words for Part 1 and 500 words for Part 2). Report writingresourcesareprovidedunderunitinformationonCanvas. Acompletedcoversheet(downloadablefrom Canvas) must be included.1Hypothetical company backgroundTastegoodLimitedisapubliclistedcompanythatspecializesintheproductionofconfectionery.The production relies heavily on the use of machinery. The company has 215,000 number ofshares outstanding trading on the stock exchange.Part 1Tastegood is currently in negotiation with a large supermarket chain, Cheap & Good Limited,to supply its confectionery in a private label for Cheap & Good. Under the terms, Tastegood isexpected to supply confectionery to Cheap & Good every year for the next ten years.If Tastegood proceeds with the supply of confectionery, the company needs to purchase ma-chinery to cope with the increase in production. New machinery is expected to cost $2,600,000,with an additional $200,000 installation and shipping costs. The machinery is expected to havea working life of 10 years. The…


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