A finished FIN-350 Topic 8 capital investment recommendation example, valuing an equipment project from tabled assumptions and testing each input to find where the recommendation would reverse. Searches like "fin 350 topic 8 assignment example", "fin350 topic 8 sample" and "fin-350 topic 8 example" land here.
What a finished FIN-350 Topic 8 capital investment recommendation looks like
The finished recommendation rests on an assumptions table kept apart from the arithmetic, every figure labeled illustrative. The project costs 200,000 and needs 20,000 of working capital, recovered at the end. It sells 10,000 units a year at 30 with a variable cost of 18, carries 50,000 of fixed cash costs and depreciates straight line to zero over five years, taxed at an assumed 25 percent. Operating cash flow is 62,500 a year, and at a 10 percent cost of capital net present value is about 29,343, with an internal rate of return near 14.9 percent. Sensitivity then does the real work. A 10 percent fall in unit sales turns the result negative, and a price just 1 lower leaves only about 912.
How a FIN-350 Topic 8 example is structured
The recommendation opens with its verdict, accept, and the single input on which that verdict depends most. The assumptions table follows, one row per input with its basis, separated from every calculation so each can be questioned alone. A cash flow section builds operating cash flow from the table, showing the depreciation tax effect and the working capital outlay and recovery. The valuation section discounts the five years at the cost of capital and reports net present value, internal rate of return and payback together. A sensitivity section moves one input at a time and reports each new result beside the base case, including a 12 percent discount rate that still leaves about 16,647. A break-even line finds the unit sales, about 9,140, at which value falls to zero. The closing section names what management should monitor in the first year.
Verdict and its weakest input first
The recommendation leads with acceptance and names price as the input it depends on most, before any table or calculation appears.
Assumptions tabled apart from the arithmetic
Each input sits in its own row with its basis, so a reader can dispute the sales forecast without reworking the depreciation or the tax line.
Working capital in and out
The 20,000 tied up at the start returns in year five, and the example discounts that recovery from the date it actually arrives.
One input moved at a time
Units, price, variable cost and the discount rate are each shifted alone, with the new value placed beside the base case of about 29,343.
Break-even unit sales located
Value reaches zero near 9,140 units a year, about 8.6 percent below forecast, a margin management can set against how accurate past forecasts have been.
Where marks go in FIN-350 Topic 8
Assumptions scattered through the calculations are the costliest flaw, since a reader who doubts the sales forecast has no single place to change it and see what happens. Discounting the working capital recovery as though it arrived in year one, or leaving it out, misstates value in a way that is easy to spot. Subtracting depreciation as though cash left the firm double counts it, while ignoring its tax effect undercounts the cash. Sensitivity runs that change several inputs together show movement without a cause. A net present value reported with no break-even or reversal point leaves management unable to judge how safe the verdict is. Recommendations that stop at the figure, never saying accept or reject, forfeit the marks the closing topic reserves for judgment.
Get a FIN-350 Topic 8 example written to your instructions
Send the FIN-350 Topic 8 instructions and the rubric from your classroom, with the project data your section assigned. We write a custom example to those instructions, with the verdict leading, assumptions tabled apart from arithmetic, cash flows built with tax and working capital effects, one input tested at a time and a break-even located, in 24 to 48 hours. The first one is free.
FIN-350 Topic 8 questions, answered
Why keep assumptions separate from calculations?
Because a reviewer who doubts one input should be able to find it, change it and see the effect without untangling a spreadsheet. In the example, the sales forecast, price, costs, tax rate and discount rate each sit in their own row. That layout is what makes the sensitivity section possible, and it lets a reader test the recommendation rather than simply accept it.
Which input matters most?
In this project, price and variable cost, because each unit of margin affects all 10,000 units every year. A price just 1 lower leaves value near zero, while raising the discount rate from 10 to 12 percent still leaves about 16,647. The example reports that ranking so management knows which assumption deserves the most scrutiny before committing funds.
How is the working capital recovery treated?
As a cash inflow in the final year, discounted from that year. The 20,000 committed at the start to inventory and receivables is released when the project winds down, so it appears as an outflow at the beginning and an inflow at the end. Omitting the recovery understates value, and discounting it from too early a year overstates it.