An expansion worth 13.46 million against a retrofit returning 15.10 percent: two projects ranked by three measures in this MT480 Unit 8 capital budgeting analysis, the conflict settled on value. Searches like "mt 480 unit 8 assignment example", "mt480 unit 8 sample" and "mt480 unit 8 example" land here.
What a finished MT480 Unit 8 capital budgeting analysis looks like
About five pages with two cash flow tables. The expansion costs 104 million in glass and lighting plus 3.5 million of working capital, reaches 22.4 million pounds a year after a two-year ramp, and sells at 1.72 dollars against 0.83 of variable cost and 3.9 million of fixed cost. After 24 percent tax and straight-line depreciation, it yields 13.435 million a year at full output. At an 8.5 percent hurdle the expansion's net present value is 13.455 million, its internal return 10.08 percent and its payback 8.57 years. The retrofit costs 21.5 million and saves 4.3 million a year after tax for ten years: value 6.714 million, return 15.10 percent, payback exactly 5.0 years. Incremental cash flows cross at 9.38 percent. Equivalent annual values, 1.422 against 1.023 million, confirm the ranking.
How a MT480 Unit 8 example is structured
The paper builds cash flows before it measures them. A first section derives the expansion's annual flow from pounds, price, costs, depreciation and tax, with the two ramp years shown separately and working capital recovered in year twenty. The retrofit's flows follow in a shorter table. The hurdle rate section explains the 8.5 percent: the Unit 7 cost of capital of 7.96 plus about half a point for an expansion carrying ramp and price risk that the existing business does not. Measures come next, all three for both projects, in one comparison table with a profitability index and discounted payback beside them. The conflict section computes the crossover rate and shows the ranking flipping above 9.38 percent. A final section chooses the expansion, adding the equivalent annual check because the two projects run twenty years and ten.
From pounds to cash
Full output of 22.4 million pounds at 0.89 dollars of margin each, less 3.9 million fixed, gives EBITDA of 16.036 million before depreciation of 5.2 million and tax.
Why 8.5 and not 7.96
A half-point premium over the firm-wide rate reflects a ramp and a new price exposure that the grower's established houses do not carry.
Three measures, two winners
The expansion leads on value at 13.455 million; the retrofit leads on return, 15.10 against 10.08 percent, and on payback, 5.0 years against 8.57.
Where the ranking flips
Discounting the difference between the two streams shows the retrofit's value overtaking the expansion's at any hurdle above 9.38 percent.
Unequal lives
Twenty years against ten could flatter the longer project, so equivalent annual values of 1.422 and 1.023 million are compared, and they still favor expansion.
What payback adds
Discounted payback of 15.77 years flags that most of the expansion's value arrives late, a risk the paper carries forward rather than a reason to reject.
Where marks go in MT480 Unit 8
Cash flow construction, not the measures themselves, is where this assignment is usually won or lost. Working capital left out of year zero overstates the expansion's value by about 2.8 million, and forgetting its year-twenty recovery understates it by 0.68 million. Depreciation subtracted as a cash cost rather than treated as a tax shield understates every year's flow. When the measures disagree, papers that report both rankings and stop leave the unit's central question unanswered; the rubric wants the conflict resolved and the reason stated, which for mutually exclusive projects is value added to shareholders. Payback presented as a profitability measure draws comment. Unequal lives compared without an equivalent annual check can cost points where sections teach it. A hurdle copied from the firm-wide rate, with no word on project risk, is a quieter loss.
Get a MT480 Unit 8 example written to your instructions
Attach your Unit 8 proposal with its costs, forecasts and required rate, the rubric, and your section's preference for spreadsheet output or hand calculations. A custom analysis derives the cash flows line by line, reports all three measures and settles any disagreement between them on value. First custom sample: free, turned around within 24-48h in most cases.
MT480 Unit 8 questions, answered
Why not take both projects?
In the case, the site's electrical service can supply the expansion's lighting or the retrofit's, not both, which makes them mutually exclusive. If both could be done, each would simply need a positive value at the hurdle rate, and both pass. The sample states the constraint in its opening paragraph because the whole conflict between the measures depends on it.
Does a 15.10 percent return not beat a 10.08 percent return?
As a rate, yes; as dollars added to the firm, no. The retrofit earns its high return on 21.5 million, the expansion a lower return on 107.5 million. At the 8.5 percent hurdle, the expansion adds 13.455 million and the retrofit 6.714. Shareholders spend dollars, so for exclusive choices value decides, unless capital is rationed.
How was the crossover rate found?
By subtracting the retrofit's yearly cash flows from the expansion's and solving that difference for its internal return, 9.38 percent. Below that rate the expansion adds more value, above it the retrofit does. The sample also prints both values at 6, 7, 10 and 12 percent so the flip can be seen without redoing the calculation.