IBM Capital Budgeting Case Study Analysis
The report contains the analysis of the capital budgeting project of IBM’s introduction of a new type of computer in the form of tablet, with operating power similar to a high-end desktop with the size of an IPad. The analysis includes projected free cash flows, NPV and a sensitivity analysis, under different given scenarios followed by the recommendations.
Data and Assumptions
|Data and Information Gathered|
|Property plant and Equipment (IBM) 2019||32028||Annual Report 2019 Balance Sheet|
|Revenue 2019||77147||Annual Report 2019 Balance Sheet|
|Current US Federal Income Tax Rate||21.00%||Deloitte|
|Initial Investment/PP&E 2019||10%||Given|
|1st year revenue as % IBM’s total revenue (Assumed) 2019||7%||Assumed|
|1st year revenue||5400||—-|
|% of NWC as sales 2019||0.93%||Assumed|
|Cost of Capital||12%||Given|
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