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week 3 discussion finance 571

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You are a Finance Manager for a major utility company.

Respond to the following in a minimum of 175 words and citations for full credit:

  • Think about some of the capital budgeting techniques you might use for some upcoming projects.
  • Discuss at least 2 capital budgeting techniques and how your company can benefit from the use of these tools.
  • Compare your approaches to other students’ responses. How were they similar or different? Why might you use the different approaches shared by your classmates?

Due Monday

Reply to at least 2 of your classmates or your faculty member. Be constructive and professional.


Chris
Montoya

9 hours ago, at 10:24 AM

NEW

This week at work we had to convert our 600 person call center into a work from home operation in 4 days. This was a massive undertaking and we had strict timelines as the local government was going to issue a stay at home order and limit all businesses that house more than 100 people. The decision was made first using a break-even analysis, we had to add up the potential risk of sending equipment home and weigh in the increase in show rates by people working from home and the potential performance impacts, as well as the cost of reimbursing employees for internet access, to see if going through the endeavor of this scale was worth it or whether we could afford to just close the site and pay employees for time not worked. Other states would still allow sites to stay open however overall show rates for the company had dropped below 50% because of Covid risks. The company decided our service was essential and we got the go ahead to come up with a plan. The next technique we used was the constraint analysis, in a 24 hour center, we had more employees than we had computers. We also had to figure out a safe way for employees to collect equipment in a way that allowed for 6 ft spacing in the center and in a way that allowed them each to be set up at home by our timeline. We came up with a plan move staffing around the building as we boxed the workstations then set up appointments for employees to pick up their equipment. In some cases we shipped unused workstations from other centers across the country to centers that needed them. Our plan worked really well, other service centers modeled our plan and in a week our company rolled over 5000 employees into work from home roles. As of yesterday we took more customer service calls from home than we did from our centers.


Nesha
Stafford

19 hours ago, at 11:35 PM

NEW

Good Evening Class,

If I were a Finance Manager for a major utility company, I would reference capital budgeting techniques that allow me to forecast accurate cash flows, interest rates, and investment strategies. The profitability index measures the net present value of a project per dollar amount of investment (Brealey, 2019, p. 254), also known as the benefit-cost ratio. Its net present value clearly defines the benefit of the project and a specific investment amount (cost) (Brealey, 2019, p. 254) using this method leaves little room for error. As explained in the text, “the profitability index is designed to select projects with the most bang per buck, or greatest net percent value (Brealey, 2019, p. 255).”I would avoid assessing projects solely off of higher NPV’s and include balanced assessments of costs related to benefit. Using the Internal Rate of Return method or IRR would be useful in determing if the project’s return would be higher or lower than the opportunity cost of capital (Brealey, 2019, p. 246). I would refer to this method sparingly because it does not provide advantages when two or more competing proposals are at stake (Brealey, 2019, p. 249). It is essential to understand and identify how the company’s financial investments support future profitability and outline networking capital to best benefit shareholders. These would be driving factors when making any financial investments and decisions.

References: Brealey, D. (2019). Fundamentals of Corporate Finance (10th ed.). Retrieved from The University of Phoenix eBook Collection database



 
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