Overview: For the final project, you will use 2017 UPS Annual Report to prepare a financial analysis report for UPS. You will include in your analysis the
background calculations and managerial analysis for each of the following topics: time value of money, stock and bond valuation, and capital budgeting. You will
also discuss macroeconomic variables that might impact the company’s financial decision making and strategic objectives. These topics will be covered over four
milestones to be submitted throughout the course before you submit the final project. Note that while these elements may seem separate and unrelated,
together they will present a well-rounded view of the company’s finances with regard to the topics.
In this milestone, you will submit a draft of the Capital Budgeting Data section of the final project, along with your supporting explanations.
Prompt: Provide your recommendation on a potential investment project for UPS. based on the net present value (NPV) and internal rate of return (IRR).
Compare these calculations for their use in evaluating a potential investment. Complete your calculations on the designated tab in the Final Project Student
Workbook.
Specifically, the following critical elements must be addressed:
IV. Capital Budgeting Data
A. Suppose the company is considering a potential investment project to add to its portfolio. Calculate the following items:
1. The net present value (NPV) of the project
2. The internal rate of return (IRR) of the project
B. What are the implications of these calculations? In other words, based on each of the calculations, and being mindful of the need to balance
portfolio risk with return, would you recommend that the company pursue the investment? Why or why not? Be sure to substantiate your
claims.
C. What is the difference between NPV and IRR? Which one would you choose for evaluating a potential investment and why? Be sure to support
your reasoning with evidence.
Guidelines for Submission: Your paper must be submitted as a 2- to 3-page Microsoft Word document, not including your calculations, which should be
completed on the designated tab in the Final Project Student Workbook.
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