Financial Analysis and planning for Metropolitan Transportation Authority
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages
Financial Analysis and planning for Metropolitan Transportation Authority
Running head: FINANCIAL ANALYSIS 1
FINANCIAL ANALYSIS 5
Southern New Hampshire University
Financial Analysis and planning
Metropolitan Transportation Authority is an essential part of the transportation sector in New York City as one of the firms that provides commuter services in the town. New York City has high traffic congestion; as such, the company intends to address this problem that has increased the cost of living in the city. The company has come up with a plan that helps solve the problem by introducing a new car. The introduction of the new car will cause the company some money. Thus, the firm intends to understand the financial aspect of the project. The company plan includes an introduction to new cars that help to ease traffic congestion in the city. To achieve must plan how it funds the costs and predicts the cash flows. Therefore, budgeting is important as it will help in establishing the expenses needed to help the business develop to go effectively by indicating costs of the business in costs such as salaries and wages, rent, advertising, expenses, paying interests, supplies, utilities and personal property (Brealey eta l., 2012).
Predicted Sales and Costs
The expected fixed cost of a new plan to build a new car is expected to be $8,000,000 for the next four years. The predicted variable cost will be 15% of the total revenue for the sales of the car for each year. The unit price per car is predicted to be $7500, and the sale quantity is expected to total 3600 in year 1, 4300 in year 2, 5200 in year 3 and 3900 in year 4. The taxes are expected to be 38%.
The cash flows for year 1, 2, 3, and 4
Also, the cost of having a new machine/plant is expected to be $25,000,000. The firm will require a net working capital of $1,250,000.
Sources of Funding
The funds will be raised through equity and debt. The difference between equity and debt funding is that debt is acquiring a loan for interest, while equity is selling shares of the company. Equity can be done through venture capital, private, or stock markets. (Karsh & Fox, 2014). Also, public source funding re-regulated by a set of legislative bodies hence requires complicated procedures and contracts since it comes from the government funds. In contrast, private investors come from willing individual and private organizations without complicated procedures (Karsh & Fox, 2014). Thus the difference in terms of the source of funding of the non-profit organization is that for the private well-wishers and founders fund the organizations. In contrast, the public, non-profit organizations funds are donations from the general populations.
Capital budgeting technique to ensure the effective and efficient use of funds to achieve project goals. Thus, capital budgeting is a framework that institutes how different organizational goals are made and how resources are distributed. Therefore, the state explains how capital is related to engineering. Acquisition of assets might be made using a different source of funds like retained profits, loans, shareholders’ contributions. As such, each source of funds has its strength and weakness, particularly in relation to income taxation. There are different factors that must be considered to ensure effective capital budgeting. Such factors include the risk of capital loss and loss of expected returns. For example, if the firm intends to spend $10000 in either of the following risks: high, medium, and low-risk projects. The investors’ decision of investments will be influenced by the amount of risk an organization is considering to take must have more returns. Therefore, if high risks offer 20% and moderate risk of offers 19% return, it is clear that the engineers would likely go with a 19% average return as it is less risk and favorable to the organization (Newnan et al., 2004). This is because the high risk doesn’t have much return to warrant its risk status. The risks return with a higher gap, like 20%, and 14% is more difficult to choose, and a decision will be influenced by factors such as organization policy on investment, extra available capital, and availability of investors.
Net Present Value Analysis
The resources used in an organization helps in ensuring that the intended project becomes successful. As such, a firm that fails to allocate resources effectively eventually suffers in the long-term as it is challenging to reverse long-term decisions that affect the organization’s future outputs. Thus proper resolution will help the company to increase revenue. Capital budgeting “is a crucial decision as it requires a huge capital allotment, and a wrong decision could bleed a lot of money which could be catastrophic for a business (Baucells & Bodily, 2018)”.
According to Libby, (2017) NPV refers to the return a company will get from investments from a given period. The differences between organization cash inflows and cash outflows factoring interest rates help in determining interest rates. Cash inflows are calculated as cash inflows less tax income multiplied by the discounted rate. The expected cash flows of the business are sales revenue that a company intends to sell and generate for one year. Sale revenue is defined amount of quantity sold multiplied by the price of the products. Therefore, the sale revenue is crucial in calculating NPV.
Also, the company has predicted that its fixed expenses for the next couple of years will be $4,150,000. Fixed cost is an expense that business incurs even if it’s not produced. An example of a fixed cost is the lease agreement (Marchioni et al., 2018). Thus, whether the company produces goods and services or not, the fixed expenses are incurred. As such, Alteryx Inc. fixed expenses are $4,150,000 regardless of the number of units produced.
Year MACRS schedule
This is calculated as follows.
NPV $16,318,430.13 IRR 41.05%
Depreciation expense refers to the amount of money that an organization reports in the financial statement (Bloomberg, 2017). Thus, it is the asset’s cost. Earnings before Income Tax (EBIT) can be defined as business income prior to deducting taxes. The income before tax for the first year is $ 9,269,000.00. The calculation for income before taxes is calculated by deducted cost of goods sold and operating expenses.
The IRR of the project is 41.05%. The project will generate an internal rate of return; thus, the company should go head and investment in the new project that will help in introducing a new car in New York City. As such, the company will address traffic congestion; thus, improving the living conditions of the New Yorkers and also make money in the process.
Baucells, M., & Bodily, S. E. (2018). Net Present Value Analysis of Projects Under Expected Utility.
Brealey, R. A., Myers, S. C., Allen, F., & Mohanty, P. (2012). Principles of corporate finance. Tata McGraw-Hill Education.
Bloomberg. (2017, December). Company Overview of Metropolitan Transportation
Authority, Inc. Retrieved December 2017, from www.bloomberg.com: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=162976
Marchioni, A., & Magni, C. A. (2018). Investment decisions and sensitivity analysis: NPV-consistency of rates of return. European Journal of Operational Research, 268(1), 361-372.
Libby, R. (2017). Accounting and human information processing. In The Routledge Companion to Behavioral Accounting Research (pp. 42-54). Routledge.
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
GET THIS PROJECT NOW BY CLICKING ON THIS LINK TO PLACE THE ORDER
Do You Have Any Other Essay/Assignment/Class Project/Homework Related to this? Click Here Now [CLICK ME] and Have It Done by Our PhD Qualified Writers!!
Tired of getting an average grade in all your school assignments, projects, essays, and homework? Try us today for all your academic schoolwork needs. We are among the most trusted and recognized professional writing services in the market.
We provide unique, original and plagiarism-free high quality academic, homework, assignments and essay submissions for all our clients. At our company, we capitalize on producing A+ Grades for all our clients and also ensure that you have smooth academic progress in all your school term and semesters.
High-quality academic submissions, A 100% plagiarism-free submission, Meet even the most urgent deadlines, Provide our services to you at the most competitive rates in the market, Give you free revisions until you meet your desired grades and Provide you with 24/7 customer support service via calls or live chats.