FIN300 Week 6 CT

The CFO of your selected publicly traded company listed on the NYSE or NASDAQ has requested a formal memo evaluating a potential capital investment project. You will assess whether the company should proceed with the project based on financial feasibility using quantitative capital budgeting techniques. Your analysis should include a discussion of project cash flows, risk, and the decision-making criteria used to determine if the investment adds value to shareholders.

Objective

This assignment reinforces this weeks learning outcomes by requiring you to:

• Apply capital budgeting tools such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period.
• Identify and evaluate relevant cash flows, including opportunity and sunk costs.
• Analyze the financial viability of proposed investments and the associated risks.
• Communicate strategic recommendations based on financial results.

Instructions

Continuing your analysis for the same company, prepare a 500word memo addressed to the CFO. You are to:

1. Identify one potential capital investment project (e.g., new product line, facility expansion, or technology upgrade).
2. Use an AI platform of your choice (ChatGPT, Gemini, Claude, Copilot, etc.) to help estimate the projects NPV, IRR, and Payback Period using reasonable assumptions.
3. Interpret the AI-generated calculations in your own words, explaining what they indicate about the projects feasibility.
4. Discuss the sensitivity of your results by testing changes in key assumptions such as discount rate, cash flow projections, or project life.
5. Conclude with a clear recommendation on whether to proceed, grounded in quantitative and qualitative reasoning.

Use AI iteratively to model multiple financial outcomessuch as different discount rates or project durationsand refine your final recommendation. Demonstrate your professional judgment by interpreting and validating AI results through your own analysis.

Memo Template

To: [CFO Name], Chief Financial Officer

From: [Your Name], Financial Analyst

Date: [Insert Date]

Subject: Capital Budgeting Analysis for [Company Name]

Introduction

Provide background on the company and describe the potential capital investment project. Explain why it is strategically important.

Financial Evaluation

Present the capital budgeting calculations (NPV, IRR, Payback Period). Interpret the results and summarize AI-assisted outputs.

Sensitivity and Risk Analysis

Discuss how changes in assumptions affect results. Include examples of scenarios modeled using AI tools.

Interpretation and Recommendation

Explain what the findings imply for shareholder value and long-term financial strategy. Provide a go/no-go recommendation.

Conclusion

Summarize the key takeaways from your analysis and reiterate your recommendation for management consideration.

Submission Requirements

• Length: Minimum 500 words (excluding references).
• Sources: Minimum four credible references in APA format.
• Use AI responsibly and ethically, following CSU Globals Academic Integrity and AI Use Guidelines. Disclose how you used it (for example: I used ChatGPT to calculate the NPV and IRR for Starbucks store expansion project, then analyzed how changes in cash flow assumptions affected the results.).
• Continue using the same company to maintain consistency in your financial analysis portfolio.

Rubric

[NEW] CT Rubrics

[NEW] CT Rubrics

CriteriaRatingsPtsThis criterion is linked to a Learning Outcome

Requirement

Includes all required components, calculations, and analyses as specified in the assignment, including ratio analysis and DuPont evaluation.

20 pts

This criterion is linked to a Learning Outcome

Content

Demonstrates strong knowledge of financial statements and ratios; accurately interprets and applies concepts from readings and sources.

20 pts

This criterion is linked to a Learning Outcome

Critical Analysis

Provides deep, accurate analysis and interpretation of the companys financial position, trends, and implications using ratios and the DuPont method.

50 pts

This criterion is linked to a Learning Outcome

Sources / Examples

Integrates four or more credible and relevant sources; effectively connects data and examples to support the analysis.

15 pts

This criterion is linked to a Learning Outcome

Organization, Grammar, and Style

Memo is well-organized, professionally formatted, and written with clear sentence structure and minimal errors.

10 pts

This criterion is linked to a Learning Outcome

APA Style

Proper APA formatting with in-text citations and reference list; no more than one significant error.

5 pts

Total Points: 120