JWI530 | Financial Markets in Economics - Strayer university

JWI530 FINANCIAL MANAGEMENT I

Assignment 2

Cost-Benefit Analysis

Overview

In this assignment, you will take on the role of a senior member of the finance team assigned to lead the investment committee of a medium-sized telecommunications equipment manufacturer. Your team isevaluating a “make-versus-buy” decision that has the potential to improve the company’s competitiveness,but which requires a significant capital investment in new equipment. The assignment is organized into twoparts: Part A: Data calculations based on the information in the scenarios Part B: Recommendations based on the calculations Opportunity Details The new equipment would allow your company to manufacture a critical component in-house instead of buying it from a supplier. This capability would help you stabilize your supply chain (which has suffered from some irregularities and quality issues in the past). It could also have a positive impact on profitability through the absorption of fixed costs since this new machine will have plenty of excess capacity. There may even be a possibility that the company could leverage this capability to create a new external revenue stream by providing services to other companies. The company has been growing steadily over the past 5 years, and the financials and future prospects look good. Your CEO has asked you to run the numbers. After doing some digging into the business, you have gathered information on the following:

Assignment 2

Input from Stakeholders As part of your research, you have sought input from a number of stakeholders. Each has raised importantpoints to consider in your analysis and recommendation. Some of the points and assumptions are purely financial. Others touch on additional concerns and opportunities.