Financial managment

zwzepu3
timer Asked: Nov 13th, 2013

Question Description

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.

  2. 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.

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

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

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