Project-1: Capital Budgeting Simulation
MBA AF 620
Objective: The purpose of the Capital Budgeting Simulation project is to explore the problem of resource allocation within a corporation by looking at many projects from the senior-management perspective. This simulation is a useful complement to capital-budgeting cases that focus on single projects. Illustrate the impact of capital rationing on capital investment choices. Exercise and interpret the implication of tools of investment analysis (NPV, IRR, Payback and Profitability Index). Adjust for risk differences among projects through the use of risk-adjusted discount rates. Understand how capital budgeting rules significantly influence company performance and market position.
Students may form groups to work on the project. Each group will consist of between 2 to 3 students.
Students may work on the simulation individually and will not be penalized for doing so.
Students are not allowed to run each year simulation more than 3 times. Write-up Due Dates:
Phase -1 – October 26, 2014
Phase – 2 – December 8, 2014
On September 25th by 7pm be sure to purchase the Simulation coursepack
Let the professor know, via Blackboard “Messages” application, whether you want to work in a group or individually. If you know your group member names, list them in the e-mail message.
On September 30th, the group list, if any, will be posted on the Blackboard. Beginning September 30th, students will take part in the Simulation and the Year
1 Project Funding Decision will be made any time before October 25th and the Year -1 brief précis is due on October 26th, 2014.
Write a brief précis (maximum 3 pages- excluding tables, charts and exhibits) explaining what you actually decided in Year 1. You may consider the followings in your précis.
What kind of...
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