FINCB 571 All American Career College ExxonMobil Financial Plan

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Business Finance

FINCB 571

All American Career College

FINCB

Description

Company is Exxon Mobil

Review the company you chose to work with in Competencies 1 and 2.

Describe the business, including the type of business.

Create the business case:

  • Determine why funding is needed for the company.
  • Determine the sources of funding. Consider self-funding, borrowing, equity, venture capital, and so on.
    • Evaluate the requirements of each funding source you determined appropriate.
    • Analyze the associated risks of each funding source.
    • Decide which sources are the best fit for your company based on the requirements of each. Justify your decision.
  • Estimate the cost of capital for both short-term and long-term funding sources. Research current estimated APRs for your selected sources of funding. Consider creating a table or chart to display this information.

Create a profit-and-loss statement for a 3-year period. Project revenue. State any realistic assumptions, such as growth per year, in your projections.

Estimate direct costs, including capital, marketing, labor, and supply costs.

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FINCB/571 Competency 3 Assessment and Rubric Course Title: Corporate Finance Competency Assessment Title: Financial Plan Total Number of Points: 100 Assignment Directions Prepare a financial plan for the company you selected in Competency 1. Describe the business, including the type of business. Create the business case: • Determine why funding is needed for the company. • Determine the sources of funding. Consider self-funding, borrowing, equity, venture capital, and so on. o Evaluate the requirements of each funding source you determined appropriate. o Analyze the associated risks of each funding source. o Decide which sources are the best fit for your company based on the requirements of each. Justify your decision. • Estimate the cost of capital for both short-term and long-term funding sources. Research current estimated APRs for your selected sources of funding. Consider creating a table or chart to display this information. Create a profit-and-loss statement for a 3-year period. Project revenue. State any realistic assumptions, such as growth per year, in your projections. Estimate direct costs, including capital, marketing, labor, and supply costs. Cite references to support your assignment. Copyright 2021 by University of Phoenix. All rights reserved. FINCB/571v1 Competency 3 Rubric Page 2 of 2 Competency Assessment Rubric Assignment/Performance Criteria 1. Sources of Funding (weight 10%) 2. Cost of Capital (weight 35%) 3. Profit-and-Loss Statement (weight 35%) 4. Direct Costs (weight 20%) Mastery 100% Meets Expectations 85% Not Met 0% Determination of sources of funding such as self-funding, borrowing, equity, venture capital, etc. was comprehensive. Determination of sources of funding such as self-funding, borrowing, equity, venture capital, etc. was sufficient. Determination of sources of funding such as self-funding, borrowing, equity, venture capital, etc. was insufficient or no attempt was made to determine sources of funding, such as self-funding, borrowing, equity, venture capital, etc. Comprehensively estimated the cost of capital including current APRs for selected sources. Partially estimated the cost of capital including current APRs for selected sources. Narrowly estimated the cost of capital including current APRs for selected sources or no attempt to estimate the cost of capital and current APRs for selected sources was made. Created a fully complete profit-andloss statement for a 3-year period including revenue projections and stated assumptions. Created a mostly complete profitand-loss statement for a 3-year period including revenue projections and stated assumptions. Created an incomplete profit-andloss statement for a 3-year period including revenue projections and stated assumptions or no attempt to create a profit-and-loss statement for a 3-year period including revenue projections and stated assumptions was made. Comprehensively estimated direct costs. Partially estimated direct costs. Narrowly estimated direct costs or no attempt to estimate direct costs was made. Copyright 2021 by University of Phoenix. All rights reserved. COMP 3 - ADDL HINT Comp 3 is the most difficult assignment in this course. So, I wanted to post an additional hint along with an outline as to how this assignment should be handled. Logic and consistency are key to this assignment so that you do not omit any requirements. 1) Consider yourself the CEO. You need to choose a specific project or financial goal. In other words, you need to figure out a way to add value to your firm. So, choose a project such as an expansion, specific R&D, computer upgrades, etc. Describe the project. You need to be specific as to how you plan on adding value to your firm. 2) Once you choose a project, you need to state how much funding you will need. This is your total amount of funding required. This must be stated clearly as the remaining sections depend on this figure. 3) Next, you need to tell me how you will spend this funding. Break this figure down into categories and figures. These are your direct costs. Direct costs should total the amount of funding required in #2. 4) Next, you need to explain your options as to sources of funding along with the risks. State the requirements and risks of each. Most students stick with debt, equity and self-funding. 5) Next, you need to make a choice as to which option or options you are choosing for your project. Are you going with 100% debt or 100% equity or some combination? If you choose a combination, then you need to tell me the amount of debt and amount of equity. This will be important for the next step. Debt is anything that needs to be paid back. Equity is anything that involves ownership (ie issuing new shares). If and only if, your firm has the funds available (cash or assets that can be converted into cash easily), then self-funding is also an option. Self-funding is a form of equity, however it is not considered NEW capital as you do not need to source new funds. 6) Your next section is WACC or Weighted Average Cost of Capital. You need to calculate WACC based upon your previous choices. Use an online calculate such as https://www.calkoo.com/en/wacc-calculator. The variables will depend on your previous choices. Source the variables on Yahoo Finance or online. If you are not dealing with a public firm, then source the data for a comparable firm. Don't forget to cite this data. Also, don't forget to include a discussion as to your variables and what the overall calculation means for your firm. If you are 100% self-funding, then you may simply source and cite a current WACC figure on the internet for your firm and use that figure with no further calculation required. However, you must qualify that you are able to 100% self-fund within your discussion and that these funds are already included in your WACC figure within the total equity variable. If you are raising new capital via debt and/or equity, then you will need to go through the calculation and revise your total debt and total equity variables accordingly. 7) Lastly, you need to give me 3 years worth of PROJECTED income statements. This means 2022-2024 as the figures are dependent on the success of your project. These are estimated figures. Also, you need to provide a discussion as you did for WACC as to growth, assumptions, etc. In other words, you need to discuss how you arrived at your estimates and what your reasoning is based upon. Follow the steps above so that you do not omit a requirement. Logic and consistency are key to this assignment. Again, the outline should be as follows: What is your project? How much funding do you need? How will you spend this funding? What are your options as to funding sources? What is your overall choice as to funding options? What is your WACC or cost of capital? What is your projected net income for the next 3 years? COMP 3 - ADDL HINT Comp 3 is the most difficult assignment in this course. So, I wanted to post an additional hint along with an outline as to how this assignment should be handled. Logic and consistency are key to this assignment so that you do not omit any requirements. 1) Consider yourself the CEO. You need to choose a specific project or financial goal. In other words, you need to figure out a way to add value to your firm. So, choose a project such as an expansion, specific R&D, computer upgrades, etc. Describe the project. You need to be specific as to how you plan on adding value to your firm. 2) Once you choose a project, you need to state how much funding you will need. This is your total amount of funding required. This must be stated clearly as the remaining sections depend on this figure. 3) Next, you need to tell me how you will spend this funding. Break this figure down into categories and figures. These are your direct costs. Direct costs should total the amount of funding required in #2. 4) Next, you need to explain your options as to sources of funding along with the risks. State the requirements and risks of each. Most students stick with debt, equity and self-funding. 5) Next, you need to make a choice as to which option or options you are choosing for your project. Are you going with 100% debt or 100% equity or some combination? If you choose a combination, then you need to tell me the amount of debt and amount of equity. This will be important for the next step. Debt is anything that needs to be paid back. Equity is anything that involves ownership (ie issuing new shares). If and only if, your firm has the funds available (cash or assets that can be converted into cash easily), then self-funding is also an option. Self-funding is a form of equity, however it is not considered NEW capital as you do not need to source new funds. 6) Your next section is WACC or Weighted Average Cost of Capital. You need to calculate WACC based upon your previous choices. Use an online calculate such as https://www.calkoo.com/en/wacc-calculator. The variables will depend on your previous choices. Source the variables on Yahoo Finance or online. If you are not dealing with a public firm, then source the data for a comparable firm. Don't forget to cite this data. Also, don't forget to include a discussion as to your variables and what the overall calculation means for your firm. If you are 100% self-funding, then you may simply source and cite a current WACC figure on the internet for your firm and use that figure with no further calculation required. However, you must qualify that you are able to 100% self-fund within your discussion and that these funds are already included in your WACC figure within the total equity variable. If you are raising new capital via debt and/or equity, then you will need to go through the calculation and revise your total debt and total equity variables accordingly. 7) Lastly, you need to give me 3 years worth of PROJECTED income statements. This means 2022-2024 as the figures are dependent on the success of your project. These are estimated figures. Also, you need to provide a discussion as you did for WACC as to growth, assumptions, etc. In other words, you need to discuss how you arrived at your estimates and what your reasoning is based upon. Follow the steps above so that you do not omit a requirement. Logic and consistency are key to this assignment. Again, the outline should be as follows: What is your project? How much funding do you need? How will you spend this funding? What are your options as to funding sources? What is your overall choice as to funding options? What is your WACC or cost of capital? What is your projected net income for the next 3 years?
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Explanation & Answer

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1

Financial Plan

Student's Name
Department, Institution
Course Name
Professor's Name
Date

2
Financial Plan
What is your project?
ExxonMobil, a publicly-traded company, operates in the energy industry. Its core
business involves exploring, producing, transporting, and selling crude oil and natural gas. The
company, which also happens to be one of the largest petrochemical companies, also
manufactures and transports chemicals and petroleum products (ExxonMobil, n.d.). The
management is considering expanding its operations in Malaysia. Understandably, ExxonMobil
has operated in Malaysia for the last 40 years. Despite the many years of oil exploration and
production, Gardner (2021) observes that the country's oil reserves are rich in oil. Based on this
realization, ExxonMobil intends to expand its oil and gas exploration operations in the country.
How much funding do you need?
The project is estimated to cost $750,000.
How will you spend this funding?
ExxonMobil will spend $250,000 to procure new facilities for the oil reserves. An
additional $250,000 will be used to finance research and the subsequent piping framework to
facilitate initial operations. ExxonMobil also intends to incur $50,000 to purchase drilling rigs
and spare parts before commencing its operations. The remaining $200,000 will be used to
finance the company's operat...


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I was struggling with this subject, and this helped me a ton!

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