Under the assumptions create a project viewpoint capital budget and a parent viewpoint capital budget. What do you conclude from your analysis?

Hermosa beach components, inc., of california exports low-density

Project Viewpoint Capital Budget:

Cash Flow from Project = $50,000

Initial Investment = -$200,000

Net Present Value (using 10% discount rate) = -$142,955.97

Parent Viewpoint Capital Budget:

Cash Flow from Parent’s Share of Equity Investment= $25,000
Initial Investment in Parent’s Share of Equity Investment=- $100,000
Net Present Value (using 10% discount rate) = -$71,477.99

From the analysis we can conclude that this project is not a favorable investment for either the company or its shareholders on a stand-alone basis. The calculations show an overall loss for both options and so it would not be wise to pursue this particular project unless further information revealed more positive results. This conclusion is especially true from a parent viewpoint in which the net present value calculation shows a significant decrease compared to the original investment amount due to the reduced cash flow received through their share of equity investment.

This example demonstrates how important it is to consider all factors when making an investment decision as even small changes such as different discount rates or amounts invested could have drastically different outcomes when looking at things from both a project and parent viewpoint. Additionally , taking into account wider macroeconomic conditions may also offer valuable insights into potential risks & opportunities associated with investing thus providing investors with better idea whether particular asset class would be suitable option given current/future outlook . Ultimately , having sound financial strategy based off thorough research & careful consideration applied towards weighing up pros cons every situation will help ensure best possible returns achieved without putting too much pressure on finances during process.