JTI Case - Group Requirement   Term Paper ID:45182 Click to get this paper

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Paper Introduction: COMBINED INSTRUCTIONS FOR SENSITIVITY ANALYSIS GROUP INDIVIDUAL PARTSScenarioYou have been hired as a consultant for JetSet Travel Inc JTI acompany which develops manufactures and sells a wide range of travel-related equipment and products The company expanded its luggage production this year and invested much ofits manufacturing funds into the initial manufacture of a lightweight yetdurable line of luggage JetSet Travel put many of its research development and marketing dollarsthis year into a breakthrough over-the counter tablet which prevents jetlag for of adult Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Quantitative Analysis for Management 8th ed. With respect tofuture operations, the difference is sales levels (if any) from currentlevels over the estimated useful life of the new equipment would berequired, as would the difference in the cost of operations (if any) fromcurrent levels over the estimated life of the new equipment would berequired. Sensitivity Analysis Sensitivity analysis assesses the risk that is associated with aproject. COMBINED INSTRUCTIONS FOR SENSITIVITY ANALYSIS: GROUP & INDIVIDUAL PARTSScenarioYou have been hired as a consultant for JetSet Travel, Inc. H., Noreen, E., and Brewer, P. Thesensitivity analysis also provides managers with estimates of the strengthof the potential effects of various uncontrollable factors on projectoutcomes. All together, the information generated through the performanceof sensitivity analysis allows managers to determine the comparative riskslevels that different factors hold for the success of a project (Moyer,McGuigan, and Kretlow, 2 9). Mason, OH, USA: South-Western, Cengage Learning.Render, B., Stair, R. The assessment involves the evaluation of project outcomes basedon a range of possible scenarios. What components would be included inthe spreadsheet? Among otherthings, mode development incorporates mathematical formulas that define therelationships among the factors for which values are included. Aspreadsheet application facilitates the development of and the applicationof mathematically-based models of transactions and processes. The spreadsheet is defined, and some of the advantages anddisadvantages of the uses of spreadsheets are identified. R., and Kretlow, W. Thesensitivity analysis approach allows managers to identify those factorsthat have the strongest potential to affect project outcomes. ReferencesGarrison, R. The determination of the financialviability of the project could be determined through the application of netpresent value (NPV) analysis. Application of NPV analysis to the expected earnings of aninvestment provides what is known as the discounted cash flow from theinvestment. (2 7). (2 9). Others want to know how net presentvalue of the project will vary according to cash flows different from thoseforecasted.Group Part of Requirement [PRESENTED IN THE ATTACHED DOCUMENT]Group portion- Go to the Small Group Discussion Board and explain exactlyhow a spreadsheet may be set up to build a net present value model for theequipment decision. (JTI)case is concerned with two factors. A spreadsheet analysis would allow JTImanagers to consider the question, "What if?" in relation to changes thatmay occur in relation to each of the uncontrollable factors. The majordisadvantage of the use of spreadsheets is that users can become sodependent on the model being applied that they may overlook other factorsthat may have substantial effects on the decision-making problem (Render,Stair, and Hannah, 2 3). E. Next, theapplication of sensitivity analysis to the capital budgeting planningprocess is considered. For a corporation considering an investmentproject, the discount rate may well be the cost of capital for thecorporation, or the cost of capital associated with a specific project(Garrison, Noreen, and Brewer, 2 6). Create test numbers to show the effectsunder varying circumstances. J. 3. The NPV of an investment is defined as thedifference between the capital cost of an investment and the discountedfuture cash flows from that investment. The consideration of the issues stated above begins with a discussionof spreadsheets. Using a Spreadsheet Application to Apply Sensitivity Analysis The NPV analysis that would be performed by JTI would include theseveral factors that were identified in the preceding section. (JTI), acompany which develops, manufactures, and sells a wide range of travel-related equipment and products.The company expanded its luggage production this year and invested much ofits manufacturing funds into the initial manufacture of a lightweight, yetdurable line of luggage.JetSet Travel put many of its research, development, and marketing dollarsthis year into a breakthrough over-the counter tablet which prevents jetlag for 98% of adult users.You were hired to provide the analysis and advice which will help the upperlevel management make critical decisions to reduce costs and increaseprofit. C. First, define a spreadsheet. Thiscapability allows analysts and managers to compare outcomes when the basisvalues entered into a model change. Lastly, the appropriate discount rate applicable to the use offunds by JTI would be required. What are the advantagesand disadvantages of a spread sheet? All ofthis information would enhance the capital planning decision-makingprocess. Division leaders want to know what would happen to expected cashflows under different discount rates. Managerial Accounting 12th ed. For practical applications of theNPV procedure, tables providing the discounted value of one-dollar forspecific periods into the future for specific interest rates have beendeveloped. This approachwould provide JTI managers with a range of possible outcomes that could befurther assessed within the context of probability of occurrence. How will the present value of the project vary according to cash flowsdifferent from a set forecast? There areseveral advantages that are associated with spreadsheet applications. (2 3). Contemporary Financial Management. C., McGuigan, J. In the following months, you will use your accounting skills toassist company leaders by projecting profits, focusing product lines,providing capital budgeting analysis, and making recommendations forcontaining costs.Division leaders in JTI's luggage manufacturing plants have asked for youranalysis for replacing old manufacturing equipment with faster, more costlynew equipment next year.This year, though JTI's new luggage line has experienced moderate initialsuccess, the total luggage sales have not been as great as in the past, andcash flow has been uneven in this area.RequirementYou have been asked to use sensitivity analysis in planning capitalbudgeting. Spreadsheets A spreadsheet application is a computer program that supports a widevariety of mathematical calculations and analytical procedures. For the proposed capital investment project for luggage manufacturingat JTI, data related to several factors would be required. Several ofthese factors are subject to the potential for change over the estimateduseful life of the new equipment. What would happen to expected cash flows under different discount rates?2. The first factor concerns how theapplication of sensitivity analysis can contribute to managerial decision-making in relation to capital budgeting. Upper Saddle River, NJ, USA: Prentice- Hall, Inc. Further advantages associated with theuse of spreadsheet applications are (a) the rapidity of mathematicalcalculation and (b) the accuracy of the calculations. The selection of the appropriate discount rate is critical foran effective NPV analysis. The second factor concerns how theapplication of spreadsheet software can enhance the effectiveness ofsensitivity analysis. With respect to finance, the cost of thefunds to acquire the new equipment would be required. With respect tothe new equipment, its initial cost, the cost of installation, its expecteduseful life, and its expected value (if any) at the end of its expecteduseful life would be required. (Do not transmit an actual spreadsheet.) Read others' posts and askquestions or clarify any areas that need further explanation for successfulcompletion of this project.Individual Part of Requirement [PRESENTED IN A SEPARATE DOCUMENT]Build your own spreadsheet for these calculations:1. How could you perform sensitivity analysis on the spreadsheet? With respect to the capital budgeting decision at JTI, the project ofconcern is the proposal to invest in new, costly manufacturing equipmentfor the luggage manufacturing operation. Lastly, the use of a spreadsheet application toperform sensitivity analysis is discussed. The various scenarios are defined byvariations in factors that are not controllable by project managers. M., Jr., and Hanna, M. With respect to the old equipment, itsalvage value (if any), its depreciated book value, and the costs of itsdisposition would be required. New York, NY, USA: McGraw-Hill/Irwin.Moyer, R. JetSet Travel, Inc.: Group requirement Introduction The Group Part of the Requirement for the JetSet Travel, Inc. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.