NYU Impact of Capital Rationing on Capital Investment Choices Analysis

  • This individual assignment is a continuation of the capital budgeting and investment analysis simulation. You will have an opportunity to reflect on your experience completing the simulation and demonstrate your level of understanding of capital budgeting principles.This assignment covers the following learning outcomes from the course syllabus:
    • Explore corporate resource allocation in a budget-constrained, multi-year setting
    • Analyze the impact of capital rationing on capital investment choices
    • Interpret core approaches in investment analysis: NPV, IRR, Payback Period, and Profitability Index
    • Apply risk-adjusted discount rates in project investment analysis
    • Examine the effects of capital budgeting decisions on a company’s performance and market position
    • Observe the impact of real options and project interdependencies
    • Demonstrate why rule-based decisions may not guarantee an optimal solution
    • Classify investment projects on the basis of how they influence the investment decision process; that is, mutually exclusive projects, contingent projects.
    • Explore the strategic implications of the resource-allocation process in positioning a company for the future.
    • Examine the relationship between investment choice and long-term shareholder value

    Instructions

  • For this assignment, you will perform the following tasks.1. In a Word document, create a table to display your annual investment projects, from year 1 to year 5. You may find this information from the simulation, in the Decision History tab – your decision history. You may choose to use one Table with 5 sections, from year 1 to year 5. Alternatively, you can create five separate Tables.2. Based on your knowledge of the company and the simulation, answer the following questions:
    • What strategy(es) did you use to select investment projects? (To answer this question, explain your invest decisions – why did you invest the way you did?)
    • What investment decision criteria did you employ? Why?
    • How will New Heritage Succeed? In other words, what does the company need to do to succeed?
    • What is the role of each department/division of the company? Explain how are these roles related?
    • Why is the company’s capital budget constrained?
    • What are the effects of budgetary constraint on the company’s capital budgeting process and growth?
    • How can serious games and simulations enhance the student learning experience?

    Please note that these questions are prompts for you to address within your paper. Your paper should be written as an essay with topical headers; it should not be formatted in a Q&A format according to the above questions. These questions represent the minimal items that you would want to address. From your readings, your research, the simulation and your lectures, you will be exposed to other topics that may be relevant to the paper, and you would do well to consider those in writing the essay. As part of my evaluation process (see attached rubric), papers which cite peer reviewed sources as opposed to general websites or articles are considered a higher quality of source.Below are some key guidelines you will want to ensure you follow in writing the paper. Think of this list as a quality control checklist, along with the attached grading rubric.

    • Paper is 4 – 6 pages in length
    • Include a title page and reference listing, but do not count your title page and reference listing as part of the 4-6 pages of content we are expecting.
    • Paper format complies with APA 6 guidelines
      • Also, you will find additional resources listed in the syllabus
    • No more than 15 percent of paper is comprised of outside sources or direct quotes
    • Paper is not written in a Question and Answer format, but makes appropriate use of headers and formatting in compliance with APA 6 guidelines
    • Paper evidences reflection of the individual author relative to the broader discipline
    • Paper is free of grammatical errors

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