XYZ Corporation - An Integrated Capital Budgeting Case

• In Event: Teaching, Learning, and Curriculum I

Abstract

This (fictional) educational case illustrates some real-life issues that decision-makers face when evaluating capital investment projects. To complete the case successfully, you will need to integrate concepts from accounting (determining relevant cash flows), finance (modeling-related issues associated with the net present value decision model), tax (various real-world considerations), and strategy (specifying relevant non-financial considerations in making the capital budgeting decision at hand). The case requires you to evaluate an asset-replacement decision, viz., whether to keep an asset purchased two years ago or to replace that asset with a newer, more efficient model. Extensive use of Excel is required to complete the case, including the use of Excel to deal with the issue of uncertainty. A final requirement is to prepare an effective document (or table) that summarizes the various analyses you conducted.


Keywords: capital budgeting, educational case, integrated topics, financial education, tax, decision-making

Authors

• R Wayne Counts, Youngstown State University

• Raymond J Shaffer, Youngstown State University

• David E. Stout, Youngstown State University