You are the financial manager of Walnut Grove City, a small mid-eastern town, and in charge...

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Finance

You are the financial manager of Walnut Grove City, a smallmid-eastern town, and in charge of creating a capital budget forthe next year. The only project on the agenda is building a clocktower within the city square and expanding the adjacent park forsmall events. You must incorporate into the budget the expense ofbuilding a clock tower in the city's town square and adjacent park,and may choose the size, exact location and materials to be used.The expense for the clock tower is estimated to be $400,000 andclean-up of the adjacent park is estimated to be $50,000. After theexpansion, three events are planned: 1. Street party celebratingthe new clock tower and park which will continue as an anniversaryparty every year thereafter, and is expected to have a net incomeof $75,000; 2. Fourth of July fireworks celebration with expectednet income of $125,000; and 3. Labor Day carnival to celebrategoing back to school and harvest which is expected to have a netincome of $50,000. All three events will be continued eachfollowing year.
Explain the five capital budgeting steps you will use and howeach step will be associated with the clock tower project.

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Five Capital Budgeting Steps 1 Identify and evaluate potential opportunities Potential opportunity is the clocktower project 2 Estimate operating and implementation costs Expense for See Answer

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You are the financial manager of Walnut Grove City, a smallmid-eastern town, and in charge of creating a capital budget forthe next year. The only project on the agenda is building a clocktower within the city square and expanding the adjacent park forsmall events. You must incorporate into the budget the expense ofbuilding a clock tower in the city's town square and adjacent park,and may choose the size, exact location and materials to be used.The expense for the clock tower is estimated to be $400,000 andclean-up of the adjacent park is estimated to be $50,000. After theexpansion, three events are planned: 1. Street party celebratingthe new clock tower and park which will continue as an anniversaryparty every year thereafter, and is expected to have a net incomeof $75,000; 2. Fourth of July fireworks celebration with expectednet income of $125,000; and 3. Labor Day carnival to celebrategoing back to school and harvest which is expected to have a netincome of $50,000. All three events will be continued eachfollowing year.Explain the five capital budgeting steps you will use and howeach step will be associated with the clock tower project.