Business Accounting and Finance
Order ID 53003233773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
Assignment Question: Read the case study Diamond Energy Resources and answer the following questions: (i) What are the key items to keep in mind when determining the free cash flows for investment analysis? (ii) Calculate the weighted average cost of capital (WACC) for Diamond Energy Resources. How does the capital structure of a firm/project affect the WACC? (iii) Produce a projected capital budgeting free cash flow statement for the new mine that PT Diamond Energy Resources Indonesia is assessing for acquisition. Using this information, calculate the Payback, discounted payback, NPV, IRR and Profitability Index (PI) of the project. (iv) Sensitivity analysis improves the quality of decision-making in a world of uncertainty. Choose variable(s) which you think is (are) most appropriate to perform sensitivity analysis on. Then, using several scenarios (based on the information provided in the case study and your choice of variables) perform sensitivity analysis. How are payback, discounted payback, NPV, IRR and PI affected by your sensitivity analysis? (v) Identify and discuss the benefits and risks of making the investment (i.e. acquiring the mine). (vi) Based on your capital budgeting analysis, sensitivity analysis and identification of benefits and risks of the project, would you recommend to the CEO of PT D
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