Week 4 Project Activity: Investment Analysis (Draft)
Use the Budget Proposal Workbook.xlsx and Budget Proposal Template.docx to develop and present an Investment Analysis for your new business startup. You will be graded on correct analysis, proper use of spreadsheet technology, and business-like presentation of the information.
Grading Rubric
Section 4.0 Investment Analysis (Draft) Deliverable |
Points |
|---|
The cash flows show detailed inflows and outflows, as well as net cash flows. |
6 |
The NPV Analysis is properly calculated and presented. |
6 |
The Rate of Return calculations are properly calculated and presented. |
4 |
The payback period is properly calculated and presented. |
4 |
Total Points |
20 |
Company Name Your Company Name Your Company Name Budget Proposal for [enter years here] BUSN278 [Term] Professor[name] DeVry University Table of Contents Section Title Subsection Title Page Number 1.0 Executive Summary 2.0 Sales Forecast 2.1 Sales Forecast 2.2 Methods and Assumptions 3.0 Capital Expenditure Budget 4.0 Investment Analysis 4.1 Cash Flows 4.2 NPV Analysis 4.3 Rate of Return Calculations 4.4 Payback Period Calculations 5.0 Pro Forma Financial Statements 5.1 Pro Forma Income Statement 5.2 Pro Forma Balance Sheet 5.3 Pro Forma Cash Budget 6.0 Works Cited 7.0 Appendices 7.1 Appendix 1: [description] 7.2 Appendix 2: [description] (Please put page numbers in the last column of the table of contents above, because they apply to your finished assignment. Do this after your project is complete. Remove this text and all text that is in italics in this template when finished with your project.) (Also, please submit your Excel spreadsheet that shows your supporting calculations.) 1.0 Executive Summary The first paragraph of this executive summary should give a brief description of the business to which this budget applies. Very briefly describe the products and services of this company, the geography or demographics of the customers it serves, and why people purchase the main product of this business. Much or all of this information will be found in the business profile provided to you. Please use your own words, and please do not simply copy and paste the explanation in the course materials. Make assumptions if necessary. Also, provide a second paragraph that describes how the budget supports the company’s strategy. Finally, provide a third paragraph in which you summarize the key points from your budget, including the planning horizon; the amount of up-front investment; the NPV, payback, and IRR of the project; and key figures from your income statement, cash budget, and balance sheet. Remember, this is not a thesis or introduction of what you will talk about—it contains the major, specific content of each section. The second and third paragraphs should be written after you have completed all other sections of this template. As you complete sections of this template, please remove all italicized text in all sections of this template and replace it with your own text or you will lose points! 2.0 Sales Forecast Briefly introduce the sales forecast section. 2.1 Sales Forecast Here you should include a simple table showing the years and the total sales for each year, along with a brief explanation of why sales are expected to rise, fall, change, or stay the same in certain years. Provide a brief explanation of the sales forecast, indicating why you expect sales to rise or fall during the planning horizon. Your explanation should be consistent with the trends and changes in sales found in your table. Year 1 Year 2 Year 3 Year 4 Year 5 Sales 2.2 Methods and Assumptions Here you should describe how you arrived at your sales forecast in section 2.1. You should provide any detailed calculations that led you to the sales forecast values. You should also summarize any research or figures that led you to make this sales forecast. 3.0 Capital Expenditure Budget Here you should provide a screenshot of your capital expenditure budget, also listing the sources of data and assumptions that led to each line item in table format. Briefly describe the total investment and, if necessary, why major items are necessary to achieve the company’s strategy. 4.0 Investment Analysis Briefly describe the NVP, IRR, accounting rate of return, and payback period for this analysis. Indicate the discount rate you used and how you arrived at it. 4.1 Cash flows Provide an Excel spreadsheet screenshot that shows how you arrived at the net cash flows for each period in your planning horizon, and describe its highlights. 4.2 NPV Analysis Provide a screenshot of your Excel NPV analysis here, and describe its highlights. 4.3 Rate of Return Provide a screenshot of your IRR and accounting rate of return calculations here, and explain the highlights. 4.4 Payback Period Provide a screenshot of your Excel calculation of the payback period for this venture. 5.0 Pro forma Financial Statements Briefly introduce this section here. 5.1 Pro Forma Income Statement Describe key figures and assumptions from the income statement, such as important profit or sales figures and their causes. Also, provide a screenshot of your pro forma income statement. 5.2 Pro Forma Balance Sheets Provide a screenshot of your balance sheets and describe key figures they contain. 5.3 Pro Forma Cash Budget Provide a screenshot of the cash budget and describe the impact of the budget on cash balances. 6.0 Works Cited List any sources you cited in the body of your report. 7.0 Appendices NOTE: Start this section at the top of a new page. This section of the budget proposal is where you’ll attach all of the supporting materials that you’ve referenced in the preparation of your plan and that is too detailed or extensive to be included in the body of the report. Use this page to separate the appendices from the text in the body of your report. Make certain that you update the table of contents to include the title of each exhibit in the appendix and its page number. 7.1 Appendix 1: [put a description here] 7.2 Appendix 1: [put a description here] 7.3 Appendix 1: [put a description here] 2.1 Sales Forecast. Year Total Sales. 1 $150,000 2 $170,000 3 $180,000 4 $199,000 5 $275,000 Year 1 The first year will be a real struggle due to the gradual introduction and hesitation of the customers so our total sales will be marked at a lowly 150,000 Year 2 In year two, due to consistent great work and the completion of an online and grand opening market campaign ad. Our sales will continue to grow. Year 3 During the third year we will be in the race to the top. This will cause us to peak for the time so our total sales will see only a slight increase. Year 4 The fourth year should see us start to pull ahead with innovative thinking and excellent reviews and a continuous customer base. Year 5 Within the fifth year we will see our sales go up significantly from new technologies and a fusion of technology and methodology. Tis will put us on the top of the landscaping market and allow us too slowly bull the market.