Finance Assignment | Professional Writing

Dash Buildings, Inc.

Don't use plagiarized sources. Get Your Assignment on
Finance Assignment | Professional Writing
Just from $13/Page
Order Now

Ann Smith is the president of Dash Buildings Inc. (DBI), a subsidiary of Dash, Inc., one of the new long distance telephone companies that sprang up as a result of deregulation of long distance telephone service in the United States. DBI is responsible for purchasing and managing real estate used by various units of Dash. DBI acts like a private real estate investment firm – acquiring properties, managing those properties, and providing space to the other divisions of Dash. DBI occasionally rents space to other tenants when it acquires a building that has more space that is needed by dash. DBI does not, however. Purchase building for the express purpose of renting to non-Dash tenants.

DBI is a corporation rather than a department only for reasons of legal convenience. DBI acts like any other department within Dash. DBI does not raise it owns funds but receives them from the corporate treasury.

When smith first joined dash as a property manager, internal rate of return was the primary tool for project analysis. This often forced DBI to acquire smaller, older, less efficient buildings. Her role on a task force was leading the conversion to net present value was the source of recognition led to her eventual promotion to president of DBI. Net present value analysis has allowed DBI to acquire newer, larger, and more modern buildings. This had led to a dramatic decrease in complaints about buildings and greater overall employee satisfaction.

Homework For You

Oversight of capital budgeting at Dash was the responsibility of the treasurer. The prior treasurer had allowed each operating unit to use its own capital investment analysis methods, with some choosing net present value, some choosing internal rate of return, and some even choosing account rate of return. The new treasurer, who comes from a background of investment banking, wants to standardize analysis so proposals can be compared from one unit to the other. While the treasurer has not issued a formal policy. It is clear that he is leaning toward internal rate of return.

DBI has been formally evaluated as a profit center. Being credited with revenue equal to the estimate cost of renting space of the same type in the local market. Smith and her employees receive bonuses based on the profit of DBI. Bonuses at DBI had been quite small in the early years, but rising rents along with some well-timed purchases at the bottom of the real estate depression made the division profitable enough to bring it up to the maximum allowable bonus. She is, therefore, able to concentrate on maximizing satisfaction, which she believes to be the source of many further career advancement. Smith is concerned that internal rate of return will force her to return to acquiring less desirable office space. Dissatisfaction and complaints about building quality could derail her career.

BDI is currently working on additional office space for Sun City. The alternatives in Sun City are typical of those in most other location. An older building could be acquired for $7 million. Imputed rent savings from ownership would be $1.5 million the first year, and would grow 3 percent a year. After deduction of operating cost and taxes from imputed rent savings, net cash flow would be $1 million the first year and would grow 3 percent a year thereafter. It is estimated that the after tax sale price at the end of the 10 year planning horizon required by Dash would be $5 million. Alternately, DBI could construct a new building of the same size at a cost of $10.1 million. Because the space would be more luxurious, imputed rent savins would be $1.8 million and would be expected to grow 5 percent a year because of the excellent location of the building. After deduction of operating cost and taxes from imputed rent savings, net cash flow would be $1.1 million the first year and would grow 5 percent a year thereafter. It is estimated that the building would be worth $12 million after tax at the end of the 10 year planning horizon. The after tax cash flow return available on other investments similar to the risk of the DBI division (real estate) is estimated to be 12 percent. The after tax cash flow return available on investments with risk similar to the other division of Dash (telecommunications) is 15 percent. Dash is not earning its opportunity cost of capital, and its stock price is low, so management is under pressure to improve profitability. Most units are not earning bonuses at all because of low profitability.

Questions –

Compute net present value, internal rate of return profitability index, and payback period for each of the alternatives. For present value calculation, assume midyear cash flow except for initial outlay and terminal value. (with formulas)

Recommend the alternative that should be chosen.

Prepare a presentation to the treasurer explain how the company would benefit from using net present value instead of internal rate of return.

Comment on the company’s method of evaluating and rewarding success. Does the reward structure encourage optimal capital investments in DBI and the rest of the company?

Would you recommend that the reward structure be changed in any way?

Get Finance homework help today

Calculate your paper price
Pages (550 words)
Approximate price: -

Why Choose Us

Quality Papers

At Myhomeworkwriters.com, we always aim at 100% customer satisfaction. As such, we never compromise o the quality of our homework services. Our homework helpers ensure that they craft each paper carefully to match the requirements of the instruction form.

Professional Academic Writers

With Myhomeworkwriters.com, every student is guaranteed high-quality, professionally written papers. We ensure that we hire individuals with high academic qualifications who can maintain our quality policy. These writers undergo further training to sharpen their writing skills, making them more competent in writing academic papers.

Affordable Prices

Our company maintains a fair pricing system for all academic writing services to ensure affordability. Our pricing system generates quotations based on the properties of individual papers.

On-Time delivery

My Homework Writers guarantees all students of swift delivery of papers. We understand that time is an essential factor in the academic world. Therefore, we ensure that we deliver the paper on or before the agreed date to give students ample time for reviewing.

100% Originality

Myhomeworkwriters.com maintains a zero-plagiarism policy in all papers. As such, My Homework Writers professional academic writers ensure that they use the students’ instructions to deliver plagiarism-free papers. We are very keen on avoiding any chance of similarities with previous papers.

Customer Support 24/7

Our customer support works around the clock to provide students with assistance or guidance at any time of the day. Students can always communicate with us through our live chat system or our email and receive instant responses. Feel free to contact us via the Chat window or support email: support@myhomeworkwriters.com.

Try it now!

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Homework Writing Services

My Homework Writers holds a reputation for being a platform that provides high-quality homework writing services. All you need to do is provide us with all the necessary requirements of the paper and wait for quality results.

Essays

Essay Writing Services

At My Homework Writers, we have highly qualified academic gurus who will offer great assistance towards completing your essays. Our homework writing service providers are well-versed with all the aspects of developing high-quality and relevant essays.

Admissions

Admission and Business Papers

With Myhomeworkwriters.com, we will help you secure a position at your desired institution. Our essay writing services include the crafting of admissions papers. We will still help you climb your career ladder by helping you write the official papers that will help you secure a job. We will guide you on how to write an outstanding portfolio or resume.

Editing

Editing and Proofreading

Myhomeworkwriters.com has a professional editorial team that will help you organize your paper, paraphrase it, and eliminate any possible mistakes. Also, we will help you check on plagiarism to ensure that your final paper posses quality and originality.

Coursework

Technical papers

My Homework Writers harbors professional academic writers from diverse academic disciplines. As such, we can develop homework writing services in all academic areas. The simplicity or complexity of the paper does not affect the quality of homework writing services.