Graded Homework

Assignment 2: Required Assignment
2—Genesis Energy Capital Plan Report

The Genesis
Energy operations management team, nearing completion of its agreement with
Sensible Essentials, was asked by senior management to present a capital plan
for the operating expansion. The capital plan was not to be a wish list but an
analysis of the necessary expenditures to successfully establish a fully
equipped operating facility overseas.

In addition,
senior management requested meaningful financial and operating metrics to
ensure that the performance objectives for the facility were being met. The
operations management team was given five days to accomplish the following:

1. Calculate the firm’s WACC.
2. Prepare and analyze each planned capital
   expenditure.
3. Evaluate, rank, and recommend the capital
   expenditures according to beneficial value to the organization, using the
   evaluation tools NPV, payback, and IRR. Evaluation, ranking, and
   recommendations should be by category of expenditures. For example,
   facility, equipment 1, 2, and 3, and inspection.
4. Using the selected choices in part three,
   calculate the full cost of establishing a fully equipped facility. This
   would include the facility, equipment 1, 2, and 3, and inspection. In
   addition, calculate the payback, NPV, and IRR for the completed facility.
5. Construct and recommend between three and five
   metrics to measure the performance of the organization. At least one
   metric should be dividend decision-making driven.
6. Prepare an executive summary along with a
   separate document showing the calculations.

Part I

Following the
example of the operations management team, do the following:

1. Download the Capital Budgeting spreadsheet, and
   compute the WACC for Genesis Energy.
2. Using the information provided in the
   spreadsheet, analyze Genesis Energy’s project options. Then, calculate the
   periodic and cumulative net cash flows for each potential project and its
   associated options. Please note that there are five projects (facility,
   equipment pieces 1, 2, and 3, and internal inspection), and that each
   project offers multiple-configuration options (facility size, equipment
   type, etc.).
3. Evaluate, rank, and recommend a specific
   option for each capital project according to beneficial value to the
   organization, using the evaluation tools NPV, payback, and IRR.
4. Construct and recommend between three and
   five metrics to measure the performance of the new operating strategy. At
   least one metric should reflect dividend policy as it relates to rewarding
   shareholders.
5. Prepare an executive summary describing
   your recommendations for each project and the overall cost, net cash
   flows, and expected returns of the operating configuration that you
   recommend. Be sure to justify your recommendations in terms of the
   investment criteria applied in Step 3 above. Be sure to report the full
   cost of the facility as it is configured per your recommendations. Present
   and justify your operating strategy performance metrics.

Your complete
report should include all of your calculations as appendices (5 pages, or 1
page for each project).

Part
II—Executive Summary Presentation

Because of limited
resources in an era of plentiful opportunities, companies must carefully select
investments. You analyzed Genesis Energy’s expansion plans and explained your
findings in M5: Assignment 1.

This assignment
is based on those findings. In this assignment, you will create a PowerPoint
presentation that will include the following information:

• An executive summary of your findings from M5:
  Assignment 1. Be sure to adhere to the following:
• The presentation should be approximately
  6–8 minutes (or 10–12 slides).
• A statement of the problem or topic is
  included.
• A concise analysis of the findings is
  included.
• Specific details from M5: Assignment 1
  to highlight or support the summary are incorporated.

Develop a
10–12-slide presentation in PowerPoint format. Apply APA standards to citation
of sources. Use the following file naming convention:
LastnameFirstInitial_M5_A2.ppt.

By Wednesday,
May 13, 2015, deliver your assignment to the M5: Assignment 2 Dropbox.