Option #1: Exotic Foods, Inc., Capital Budgeting Case

Exotic Food Inc., a food processing company located in Herndon, VA, is considering adding a new division to produce fresh ginger juice. Following the ongoing TV buzz about significant health benefits derived from ginger consumption, the managers believe this drink will be a hit. However, the CEO questions the profitability of the venture given the high costs involved. To address his concerns, you have been asked to evaluate the project using four capital budgeting techniques (i.e., NPV, IRR, MIRR and Payback) and present your findings in a report.

For your Module 5 Portfolio Milestone and using the additional information to be found in Module 8 Portfolio Project, you are asked to complete questions 3. and 4. as follows:

  1. What is the after-tax salvage value of the equipment?
  2. What is the projected net income and Operating Cash Flows (OCF) for the three years?
      • Complete an income statement for each year.

You will include these answers in your completed final portfolio project.