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.
- 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.
- 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
- 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.
- Last week, you worked on pro forma financial
statements. Update your projected financial statements to reflect the
capital expenditure and the sources of funding.
- Prepare a Microsoft PowerPoint presentation that summarizes your findings for your Business Plan Project to date.