Describe the role that capital budgeting plays in corporate strategic management.

1. Describe for other members of the strategic planning committee the role that capital budgeting should play in corporate strategic management.
2. Explain why the NPV and IRR capital budgeting tools are superior to the accounting rate of return and simple payback techniques for determining the attractiveness of capital investment opportunities.
3. Use the Capital Asset Pricing Model (CAPM) to identify the cost of common stock.
4. Calculate the weighted average cost of capital (WACC) for the firm’s existing capital structure.
5. Calculate the net present value (NPV) for each plane model using the company’s WACC as the hurdle rate.
6. Recommend which plane should be purchased and justify your recommendation.
7. Discuss the need to manage implementation of the project so that the higher returns can be realized.  Include the strategic management keys to protecting the project from competitive forces that would erode the earning power of the project and jeopardize realization of the projected rate of return on the investment.