Investment Project & Project Analysis.

Investment Project & Project Analysis.

C

A. Instruction

1. Students will create a hypothetical but realistic project just like United Pigpen (Excel Exercise) case and submit Investment proposal in Word file and Spreadsheet in Excel file.

2. Word file MUST include: (1) Project description (2) List of Input variable assumptions (3) Investment proposal (Please use the Word format below.)

3. Excel file MUST include: (1) Input variable assumptions in each cell using Note (2) FCFs spreadsheet model (3) Investment criteria (4) Breakeven analysis (5) Sensitivity analysis (6) Scenario analysis.

a.Students should develop their own spreadsheet model.

b. Any other project spreadsheet from other websites or Google is acceptable but MUST include all the required work mentioned above.

B. Grading Criteria

1. Must submit Both Word file and Excel file.

2. Reduction criteria. (Refer to the rubrics for the specific point reduction.)

A. Missing or Sharing the requirements on the Word file.

c. Missing or Sharing the requirements on the Excel file.

d. Failure of connecting Input variables all the way through spreadsheet. All the values in spreadsheet MUST be connected to input variables. Don’t put a hard number anywhere in spreadsheet except Input variables. (That’s the most serious failure of spreadsheet in the real business! Investors or your boss will try to change the variables to see how the investment criteria change.)

C. Due Date

1. April 7th, 14.00 hr

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Individual Report Assignment

Investment Project & Project Analysis.

Name:

1. Project Description. (Strongly recommended to keep revising along with creating spreadsheet in Excel. Must be realistic based on research.)

e.g. United Pigpen is considering a proposal to manufacture high-protein hog feed. The project would make use of an existing warehouse, which is currently rented out to a neighboring firm. The next year’s rental charge on the warehouse is $100,000, and thereafter, the rent is expected to grow in line with inflation at 4% a year. In addition to using the warehouse, the proposal envisages an investment in plant and equipment of $1.2 million….

2. List of the input variable assumptions. (Why should be this amount? Must be realistic based on research. All input assumptions MUST be described here in Word and in a cell with Note on Excel Spreadsheet)

e.g. United Pigpen case

Input variables

a. Investment $1.2 million: a similar size of investment from a competitor or industry (assumptions and research with the citation)

b. Revenue $4.2 million: reasonable expected sales price per unit, expected number of goods sold (assumptions and research with the citation)

c. Cost of Capital 12%: Industry average cost of capital (assumptions and research with the citation)

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*Please research and complete just one or two variables every day as if you’re planning your own project. You will be enjoying this assignment. (You have plenty of time to complete until the due date, but clock is ticking. Work on just about an hour every day and start right now to avoid procrastinating and cramming.)

3. Investment Proposal. (Why investors or your company should invest)

e.g. Blooper Industry case

Conclusion with key points.

Results of DDP (how the project shortens the payback)

NPV (how much value expected)

IRR (how much profitable than cost of capital)

PI (how much profitable than initial investment)

Break Even Analysis (how many units to sell)

Sensitivity Analysis (which variable is most sensitive)

Scenario Analysis (considering risks)

And other comments to propose the investment.