Part One: Evaluation of Proposed Expansion

You are a small business owner and you have the opportunity to expand your facility, which will increase your production capacity over the next 5 years.  The expansion will cost $60,000 and additional equipment will cost another $20,000.

Required:

  • Additional profits after tax will amount to $18,000 per year.  Your cost of capital is 8%.  Should you go ahead with the expansion?  Why or why not? HINT: Use NPV.

Part Two: Business Plan Project, Week 3, and Presentation Summary

Continue to work on your business plan. This week, you will be working on capital expenditures and the sources of funding to finance them.

Required:

    1. Your business plan should include at least one major capital expenditure. Decide when it will be purchased and how it will be funded. The documentation should include your analysis of the project and your basis for making the investment, and the timing of investment.

 

    1. Decide on your sources of funding, describe them, and justify your decision. You may fund part of the business with your personal savings, but you should also include at least one additional source of funds to complete the funding.

 

    1. Last week, you worked on pro forma financial statements. Update your projected financial statements to reflect the capital expenditure and the sources of funding.

 

  1. Prepare a Microsoft PowerPoint presentation that summarizes your findings for your Business Plan Project to date.

Deliverables:

    1. Submit your answers to the questions inPart One, using an MS Word document, to the W3: Assignment 2 Dropbox. Use good form, and show all your calculations and conclusions.

Name your document SU_FIN4055_W3_A2_Part1_LastName_FirstInitial

    1. Address the issues for the Business Plan Project, Week 3 outlined in Part Two items 1 and 2, using an MS Word document, and submit your document to the W3: Assignment 2 Dropbox. Use good form, and cite all sources using APA format.

Name your document SU_FIN4055_W3_A2_Part2_LastName_FirstInitial

  1. Create a Microsoft PowerPointpresentation consisting of 5-10 slides that summarizes your findings for theBusiness Plan Project over the last three weeks. Post to W3: Assignment 2 Dropbox. Use good form, and cite all sources using APA format.