Time Value of Money and Annuities
Scenario
Your advice has helped Largo Global Inc. (LGI) make substantive progress. Now, you must provide the means to achieve this increase in efficiency and productivity. You must recommend a plan for making the strategic investments that will keep LGI moving on a sustainable path.
Your Project 4 business report will focus on which assets to invest in or whether to disinvest. You will identify the types of assets LGI should eventually acquire and/or renew. You will also determine the investments that will help LGI improve its operations and generate the cash flow needed to improve its bottom line.
Your work will be evaluated using the competencies listed below.
3.1: Identify numerical or mathematical information that is relevant in a problem or situation.
3.2: Employ mathematical or statistical operations and data analysis techniques to arrive at a correct or optimal solution.
3.3: Analyze mathematical or statistical information, or the results of quantitative inquiry and manipulation of data.
8.1: Evaluate major business/organizational systems and processes and make recommendations for improvement.
Step 1: Prepare for the Project
For the next two weeks, you will focus on an investment strategy that will increase the efficiency and productivity of LGI to keep the company moving in the right direction. You will pay attention to which assets to invest in and divest from to generate cash flow and improve the bottom line. Log into O’Reilly by following these instructions and complete the required reading.
Required Reading
Parrino, R. Kidwell, D. S., & Bates, T. W. (2012). Fundamentals of corporate finance. Wiley.
Chapter 5: The Time Value of Money
Section 5.1 to 5.4
Chapter 6: Discounted Cash Flows and Valuation
Sections 6.1 to 6.4
Recommended Reading
Davis, C. E. & Davis, E. (2011). Managerial Accounting. Wiley. Chapter 9, Capital Budgeting
Step 2: Review and Practice
Using the Project 4 Review and Practice Guide, review investment techniques to set LGI on a path toward a sustainable future. Then apply what you have learned by completing the exercises and problems referenced in the Project 4 Review and Practice Guide.
You must review the guide and do the practice exercises and problems so that you are prepared to have informed discussions with your team about LGI’s investment strategy, understand which assets LGI should acquire and/or renew, and can use this information to make recommendations for improvements.
Complete this review and practice by the end of Week 7.
Using the Project 4 Review and Practice Guide, review investment techniques to set LGI on a path toward a sustainable future. Then apply what you have learned by completing the exercises and problems referenced in the Project 4 Review and Practice Guide.
You must review the guide and do the practice exercises and problems so that you are prepared to have informed discussions with your team about LGI’s investment strategy, understand which assets LGI should acquire and/or renew, and
can use this information to make recommendations for improvements.
Complete this review and practice by the end of Week 7.
Step 3: Participate in the Required Project 4 Discussion
You have finished reviewing the material and performing the exercises, but you have some questions. Participate in the Project 4 class discussion. Respond to the two questions below by posting in the discussion; then, respond to two of your classmates’ discussion posts by the end of the week.
Discussion
Discuss the concepts that were most challenging for you in the readings and review material. How did the practice exercises help clarify these?
What did you learn that will help you determine which assets to invest in and where to disinvest to help LGI improve its operations, generate cash flow, and improve the bottom line?
Before you participate in the discussion activity, see MBA discussion guidelines.
Step 4: Complete the Analysis Calculation for Project 4
Your team has provided you with an Excel workbook containing LGI’s financials. You will use the Project 4 Excel workbook to perform discounting of cash flow and valuation calculations.
Complete the analysis calculation for the project:
Download the Project 4 Excel Workbook, click the Instructions tab, and read the instructions.
Calculate and evaluate the investment choices using the worksheets.
If you would like instructor feedback on this step, submit your Excel file to the Assignments folder as a milestone by the end of Week 7. This is optional. If you choose to submit the milestone, you will receive instructor feedback you may use to make corrections before submitting your final Project 4. To distinguish the milestone submission from the file you will submit in Step 5, label your file as follows: P4_milestone_lastname_Calculation_date
Step 5: Prepare the Analysis Report for Project 4
You have developed an in-depth understanding of LGI’s operating efficiency as it relates to costing and its impact on the bottom line. You feel confident that your investment choices will positively boost LGI’s productivity and improve the company’s operations. LGI will finally be on a path of a sustainable future. Answer the questions in the Project 4 Questions – Report Template document. Prepare your analysis report including recommendations for how the company can improve its financial situation.
Complete the analysis report:
Download the Project 4 Questions – Report Template
Read the instructions.
Answer all the questions.
Include your recommendations.
Submit the analysis report (Word document) and analysis calculation (Excel file) to the Assignments folder as your final deliverable at the end of Week 8. Label your files as follows:
P4_Final_lastname_Report_date.docx
P4_Final_lastname_Calculation_date.xlsx
Check Your Evaluation Criteria
Before you submit your assignment, review the competencies below, which your instructor will use to evaluate your work. A good practice would be to use each competency as a self-check to confirm you have incorporated all of them. To view the complete grading rubric, click My Tools, select Assignments from the drop-down menu, and then click the project title.
3.1: Identify numerical or mathematical information that is relevant in a problem or situation.
3.2: Employ mathematical or statistical operations and data analysis techniques to arrive at a correct or optimal solution.
3.3: Analyze mathematical or statistical information, or the results of quantitative inquiry and manipulation of data.
8.1: Evaluate major business/organizational systems and processes and make recommendations for improvement.
