An automated packaging line is appraised in full in this GF520 Unit 4 example, reaching a net present value of 1.66 million dollars and an internal return near 18.7 percent. Searches like "gf 520 unit 4 assignment example", "gf520 unit 4 sample" and "gf520 unit 4 example" land here.
What a finished GF520 Unit 4 capital budgeting analysis looks like
An assumptions panel opens the analysis, one screen listing every input with its source: a 4.8-million-dollar installed cost, 350,000 dollars of added inventory and spares, 1.75 million a year in labor and scrap savings, a six-year life, straight-line depreciation to zero, 400,000 of salvage and tax at 24 percent. Two items are marked as excluded, a 200,000-dollar feasibility study already paid and allocated plant overhead, while 120,000 a year of forgone rent on the floor space is charged as an opportunity cost. The cash flow table converts those inputs into 1.43 million of annual operating cash flow and a year-six terminal inflow of 654,000. Results follow: net present value of 1.66 million at 9 percent, internal rate of return of 18.7 percent, payback in 3.6 years and a profitability index of 1.32.
How a GF520 Unit 4 example is structured
The layout is built so every result can be traced to a named input. Assumptions come first and stand alone, which means changing one cell changes the whole analysis and a reader can see which cell that was. The incremental cash flow table follows, one row per year, splitting operating flows from the initial outlay and from terminal items so that working capital recovery and after-tax salvage are visible rather than folded into year six. Decision measures come next, each reported with a sentence on what it can and cannot show; payback, for instance, ignores the terminal inflow entirely. A sensitivity block then moves savings, rate and salvage one at a time, and a break-even line finds the savings level at which value disappears. A last paragraph gives the accept decision and the single input it depends on most.
Inputs on one panel
Cost, savings, life, salvage, tax and working capital are listed with their sources before any calculation, so the model's assumptions can be audited without opening a formula.
What stayed out and what came in
The paid feasibility study and allocated overhead are excluded as irrelevant to the decision, while forgone rent on the floor space enters as a real annual cost.
Terminal flows shown apart
Salvage is taxed down to 304,000 dollars and the 350,000 of working capital returns in year six, each on its own row instead of hidden in a total.
Four measures, one verdict
Net present value, internal rate, payback and the profitability index are reported together, with net present value named as the figure that decides.
Break-even on the savings
Value disappears if annual savings fall to about 1.26 million dollars, 72 percent of forecast, which shows how much optimism the verdict can absorb.
Where marks go in GF520 Unit 4
Cash flow definition carries the heaviest marks in this unit. An analysis that discounts net income instead of operating cash flow, here 631,000 dollars instead of 1.43 million, misstates the project from the first row. Sunk costs left in, allocated overhead charged to the project, or working capital ignored at both ends are the next most common deductions. A discount rate typed in without reference to its derivation undermines the whole table. Sensitivity run only on the discount rate, which is easy to vary, rather than on savings, which the verdict actually rests on, reads as box-ticking. Measures listed without saying which governs leave the grader to decide. Spreadsheets that hard-code results instead of linking them to the assumptions panel are marked down where the file is submitted.
Get a GF520 Unit 4 example written to your instructions
Send the project data from your GF520 Unit 4 case, the rate your section expects, and the rubric. The analysis arrives with an assumptions panel, an incremental cash flow table, all four measures and sensitivity on the input that matters. A spreadsheet can accompany the write-up when one is required. No charge applies to the first custom sample; allow 24-48h.
GF520 Unit 4 questions, answered
Should depreciation appear in the cash flows?
Only through its tax effect. Depreciation is not a cash payment, so it is added back, but because it reduces taxable income it saves real cash equal to the depreciation multiplied by the tax rate. In the sample that shield is 192,000 dollars a year. An analysis that subtracts depreciation as a cash cost, or ignores the shield entirely, misstates every operating year of the project.
Why is the feasibility study left out?
Because it has already been paid and will not change whichever way the decision goes. Only cash flows that differ between accepting and rejecting belong in the model. The same logic removes overhead that would be allocated to the project but not actually increased by it. Including either one is among the most frequent deductions in capital budgeting work, and graders often check for it first.
Does MACRS depreciation change the analysis?
Only in timing. The sample would follow the schedule the case gives, applying each year's MACRS percentage to the depreciable base and computing the tax shield year by year. Faster depreciation moves tax savings earlier, which raises net present value slightly without changing total depreciation. The custom version also taxes salvage against the remaining book value under that schedule rather than against zero.