BUS 599 Evaluating a Capital Investment Presentation Example
BUS 599 Evaluating a Capital Investment Presentation Assignment Brief
Assignment Instructions Overview
In this assignment, students will evaluate the financial feasibility of a capital investment project using cost accounting principles. The task requires the creation of a professional PowerPoint presentation with detailed speaker’s notes that simulate a 10–15 minute oral presentation. Students must demonstrate how capital budgeting tools are applied to determine whether a major expenditure should be approved. The presentation should include calculations, justification of results, a recommendation, and discussion of potential risks.
Understanding Assignment Objectives
The objective of this assignment is to provide students with the opportunity to apply theoretical and practical knowledge of cost accounting and capital budgeting to a real-world scenario. Students will demonstrate their ability to:
- Use financial tools to evaluate the attractiveness of an investment.
- Interpret results from different capital investment measures.
- Make a recommendation based on evidence, while also considering strategic and risk-related factors. This assignment emphasizes both analytical and communication skills, as students must not only perform calculations but also present findings in a clear, professional format.
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The Student’s Role
In this assignment, students will take on the role of a cost accountant. Acting in this capacity, they must analyze projected cash flows, apply evaluation methods, and provide a recommendation to senior decision-makers. The presentation should reflect how a financial professional communicates complex information effectively to an organizational audience, ensuring clarity, accuracy, and practical implications.
Competencies Measured
This assignment is designed to measure competencies in the following areas:
- Financial Analysis Skills: Applying NPV, IRR, and Payback Period to assess capital investments.
- Critical Thinking: Identifying key questions, assumptions, and risks associated with investment decisions.
- Professional Communication: Developing clear and well-structured slides with detailed speaker notes that could be used in a formal presentation setting.
- Strategic Decision-Making: Making recommendations that balance financial evidence with organizational priorities and risk considerations.
BUS 599 Evaluating a Capital Investment Presentation Example
Slide 1 – Title Slide
Slide Text:
Evaluating a Capital Investment: MRI Facility Purchase
Healthcare America
BUS 599 – Strategic Management
Date
Speaker Notes:
This presentation evaluates Healthcare America’s proposed $3 million investment in a new MRI facility. Using a cost accounting perspective, the analysis applies Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period (PP) to determine financial viability. The goal is to provide a recommendation supported by calculations and risk analysis (Drozdowski & Dziekański, 2022).
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Slide 2 – Investment Context
Slide Text:
- $3M MRI purchase for orthopedic expansion
- 10-year useful life, no salvage value
- Straight-line depreciation
- $800,000 annual cash inflows (Years 1–5)
- 9% discount rate
- Tax exemption on new investments
Speaker Notes:
Healthcare America is considering a $3 million investment in an MRI facility. The equipment has a 10-year life, with straight-line depreciation and no salvage value. The project is expected to generate $800,000 annually in cash inflows for five years. Importantly, the government has exempted taxes on profits from new investments, making this project more attractive (Sarasmitha & Utami, 2023).
Slide 3 – Evaluation Approach
Slide Text:
- Cost accounting perspective
- Emphasis on time value of money
- Focus on:
- Profitability
- Efficiency of returns
- Liquidity and risk
Speaker Notes:
This evaluation applies a cost accounting framework, which ensures resources are allocated efficiently. The time value of money principle is central—future inflows are discounted to reflect their true present worth (Kim, 2022). The assessment emphasizes profitability, efficiency of returns, and liquidity, ensuring that both financial and risk perspectives are considered.
Slide 4 – Key Criteria & Questions
Slide Text:
Criteria:
- Net Present Value (NPV)
- Internal Rate of Return (IRR)
- Payback Period (PP)
Questions:
- Are inflows of $800k realistic?
- Does IRR exceed 9% hurdle?
- Is payback period acceptable?
Speaker Notes:
Three criteria guide the decision: NPV, IRR, and Payback Period. These are widely used in capital budgeting due to their ability to capture profitability, return efficiency, and liquidity (Agung & Salsabila, 2023). The key questions include whether the inflows are reliable, whether the IRR surpasses the 9% hurdle rate, and whether the payback is within a reasonable timeframe.
Slide 5 – Investment Measures Selected
Slide Text:
- NPV → Value creation
- IRR → Return efficiency
- Payback → Liquidity and risk
Speaker Notes:
NPV identifies whether the project creates financial value. IRR shows the percentage return and is useful for comparing projects (Arjunan, 2017). The Payback Period measures liquidity and risk exposure, showing how quickly the investment is recouped. Together, they provide a balanced evaluation of profitability, efficiency, and financial safety.
Slide 6 – NPV Calculation
Slide Text:
Formula:
NPV = Σ [Rt ÷ (1 + r)^t] – C
Inputs:
- C = $3,000,000
- Rt = $800,000 (Years 1–5)
- r = 9%
Result:
NPV ≈ $125,619 (Positive)
Speaker Notes:
The Net Present Value is calculated by discounting $800,000 inflows for five years at a 9% rate and subtracting the initial $3 million. The present value of inflows equals approximately $3.125 million. After deducting costs, NPV is positive at $125,619. A positive NPV means the project is expected to create value for Healthcare America (Drozdowski & Dziekański, 2022).
Slide 7 – IRR and Payback Calculations
Slide Text:
- IRR: ~13.14% (> 9% hurdle)
- Payback Period: 3.75 years
Speaker Notes:
The Internal Rate of Return is approximately 13.14%, which is higher than the company’s 9% discount rate. This confirms the project is profitable (Kim, 2022). The Payback Period is 3.75 years, showing that the investment would be recovered before the midpoint of the MRI’s useful life. Both results indicate strong financial viability (Sarasmitha & Utami, 2023).
Slide 8 – Results and Recommendation
Slide Text:
- Positive NPV ($125,619)
- IRR > 9% (13.14%)
- Payback < 4 years
- Recommendation: Approve the MRI investment
Speaker Notes:
All three capital budgeting measures are favorable. The project adds value, delivers a return higher than the required rate, and recovers costs in under four years. It also aligns with Healthcare America’s strategic expansion in orthopedic medicine and benefits from tax exemptions. Therefore, the investment should be approved (Agung & Salsabila, 2023).
Slide 9 – Risks
Slide Text:
- Utilization Risk: Demand may not meet projections
- Technological Risk: MRI may become outdated
Speaker Notes:
Two major risks must be considered. First, utilization risk: projected inflows assume near-full utilization, which may not materialize if patient demand is lower than expected. Second, technological obsolescence: rapid advances in MRI technology could shorten the machine’s effective life. Both risks must be managed through demand monitoring, strategic pricing, and potential upgrade agreements (Arjunan, 2017).
Slide 10 – Conclusion
Slide Text:
- Investment is financially sound
- Meets profitability, efficiency, and liquidity benchmarks
- Risks are manageable
- Supports strategic growth
Speaker Notes:
The MRI facility investment is financially viable and strategically aligned with Healthcare America’s expansion goals. The positive NPV, IRR above the hurdle rate, and short payback confirm the project’s strength. While risks exist, they are manageable with appropriate planning. From a cost accounting perspective, the investment is recommended.
Slide 11 – References
- Agung, T. S., & Salsabila, B. S. Z. (2023). Analysis of the financial feasibility of businesses using NPV, IRR, and payback methods. Jurnal Multidisiplin Madani, 3(7), 1432–1441. https://doi.org/10.55927/mudima.v3i7.4663
- Arjunan, K. C. (2017). IRR performs better than NPV: A critical analysis of multiple IRR and investment projects. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2913905
- Drozdowski, G., & Dziekański, P. (2022). Net present value as reinforcement of decision-making in investment selection. Market Infrastructure, (66), 78–91. https://doi.org/10.32843/infrastruct66-7
- Kim, J. (2022). Do NPV and IRR measure the profitability of investment opportunities? Journal of Society of Korea Industrial and Systems Engineering, 45(4), 167–173. https://doi.org/10.11627/jksie.2022.45.4.167
- Sarasmitha, C., & Utami, K. S. (2023). Predicting investment feasibility using payback period, NPV, and IRR. Jurnal Multidisiplin Madani, 3(9), 1885–1897. https://doi.org/10.55927/mudima.v3i9.5779
Detailed Assessment Instructions for the BUS 599 Evaluating a Capital Investment Presentation Assignment
Paper Details
Overview
Most businesses are forced to evaluate opportunities for capital investments to allocate scarce funds. While there are many ways to evaluate the wisdom of capital investment, one such way is to do so from a cost accounting perspective. In this assignment, you play the role of cost accountant evaluating a planned investment.
Scenario
Healthcare America is weighing the purchase of a new $3M MRI facility to serve its expanding presence in the area of orthopedic medicine. The expectation is that the machine will be nearly fully utilized in the next five years. The government recently exempted taxes on profits from new investments to encourage capital investments. The equipment is expected to have 10 years of useful life with no salvage value. The company employs straight-line depreciation. Net cash inflows of $800,000 are expected each year for five years. The company uses a rate of 9% in evaluating its capital investment projects.
Instructions
Create a professional PowerPoint presentation (with detailed speaker’s notes) that fully supports your recommendation of whether or not this capital expenditure is justified from a cost accounting perspective.
Include the following in the presentation:
Explain your overall approach to evaluating the capital purchase.
What criteria are most important?
What questions do you need answered?
Justify your choice of three capital investment measures that you believe best support a responsible recommendation.
Perform the calculations for each of your chosen measures. (Note: If you need more data for your chosen methods, make sure to state your assumptions or reasonably chosen data values.)
Recommend your choice on whether or not to make this investment with support from your calculations and the other considerations stated in your overall approach.
Describe the two most significant risks associated with your recommendation from a cost accounting perspective.
Additional Requirements
Presentation Guidelines
Length: 8-10 slides, that would accompany an approximately 10-15-minute oral presentation. Although you are not required to record or give a presentation for this assignment, the slides and speaker notes must contain enough information as if you were presenting.
Prepare detailed speaker’s notes describing items on each slide so that the viewer can accurately interpret the deeper meanings and intentions that would have been conveyed orally.
Visuals: Include graphical elements that are easy to read and interpret. Use colors, fonts, formatting, and other design principles that make the information clear and generally add to the aesthetic and professionalism of the presentation.
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