finance

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Homework Assignment #5 rubrics (total 140 points):

Instructions: The fifth assignment is a detailed capital budgeting analysis of a clothing company opportunity. The company wants to launch a new clothing product line by investing approximately $9 million into the product line with homes of selling millions of items over the next decade. It wants your team to evaluate whether this is a wise business decision or not based on a thorough 10-year projection discounted cash flow analysis. Here is what you need to do: • Form your groups (keep the same group you worked with previously unless you get approval to change groups): Please keep the same group as you worked in HW#2. If you worked on HW#2 individually you may keep doing so on this assignment. • Your group will be assigned what Business opportunity (clothing line) you are to analyze: Your group has to work on the assignment clothing line tab in the assignment 5 data file. • Find the tab for your assigned business opportunity (clothing line) with the required data that you need in the file Assignmnet_5_data.xls. • Build a 10-year discounted cash flow model based on the provided data to analyze the opportunity (build the cash flow model in spreadsheet and label it as Question 1: 20 points). • Using the provided data calculate the WACC and use this as your discount rate (show your WACC calculations in spreadsheet and label it as Question 2: 10 points). • Build a base case based on the provided data, analyze the results (Build and show base case with the results in spreadsheet and label it as Question 3: 5 points; Analyzing the base case results you got in Anaysis Report(word file) and label it as Question 3: 5 points) • Build an optimistic case based on the provided data, analyze the results (Build and show optimistic case with the results in spreadsheet and label it as Question 4: 5 points; Analyzing the optimistic case results you got in Anaysis Report(word file) and label it as Question 4: 5 points) • Build a pessimistic case based on the provided data, analyze the results (Build and show pessimistic case with the results in spreadsheet and label it as Question 5: 5 points; Analyzing the base case results you got in Anaysis Report(word file) and label it as Question 5: 5 points) • Run sensitivity analysis on the key variables to this business, analyze the results(Select two key input variables of your cash flow model, like WACC, or sales growth rate, or other variables you are intesteted to show the sensitivity of your business to these variable change in spreadsheet and label it as Question 6: 5 points; Analyzing results of sensitivity analysis in Analysis Rerport (word file) and label it as Question 6: 5 points) • Run a break-even analysis on the key variables and analyze the results. (Do a NPV break even analysis of your business and find the break even sales or break even WACC in spreadsheet and label it as Question 7: 5 points; Analyzing results of break even analysis in “Analysis Report” (word file) and label it as Question 7: 5 points)

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• Determine NPV, IRR, PI, Payback Period for base case (show in spreadsheet and label it as Question 8: 5 points; Analyze the results in “Analysis Report” (word file) and label it as Question 8: 5 points) • Determine NPV, IRR, PI, Payback Period for optimistic case (show in spreadsheet and label it as Question 9:5 points; Analyze the results in “Analysis Report” (word file) and label it as Question 9: 5 points) • Determine NPV, IRR, PI, Payback Period for pessimetic case (show in spreadsheet and label it as Question 10: 5 points; Analyze the results in “Analysis Report” (word file) and label it as Question 10: 5 points) • Build a PowerPoint presentation slides detailing your analysis and findings 6-10 slides should cover it well. Make sure to evaluate base case, pessimitic case and optimistic case (3 points), the sensitivity analysis(3 points), break even analysis(3 points) and results of opportunity on an NPV, IRR, PI, PP perspectives (3 points) to determine if this is a good opportunity or not(3 points). Note: Presentation slides total points is 15 points including above. • In your PowerPoint presentation include an recorded oral presentation to corresponds to your slides and your analysis. Each group member should be presenting a portion of the analysis. Talk about what you did( 5 points) , how did you perform your analysis(5 points), what did you find out and what do you think about the opportunity(5 points). The presentation should be less than 15 minutes in total( 5 points). Every group member should introduce yourself and present at least 2 minutes in total presentation. Note: Video presentation total points is 15 points including above • If you work on the project individually, the grading criteria (points for each partial questions above) remains the same. How to submit it to the Canvas? Four files to be submitted to Canvas HW#5:

1) Your group’s presentation video recording in mp4 fie format (Total 15 points see above). 2) Your groups presentation slides in PPTX file format (total 15 points see above) 3) One Excel file including all data and spreadsheet model you build and the results. Make sure

your label all questions listed above correctly in your spreadsheet file (Total 70 points see above). Refer to the HW5 template posted in Canvas and develop your own spreadsheet for your group’s assignment. Note: You can also develop your own spreadsheet model not using the template, or feel free to modify the template.

4) One Word file “Analysis Report” in .docx file format including the analysis of following (Total 40 points see above) . Also make sure you label the questions correctly.

• Build a base case based on the provided data, analyze the results (Analyzing the base case results you got in Anaysis Report(word file) and label it as Question 3: 5 points) • Build an optimistic case based on the provided data, analyze the results (Analyzing the optimistic case results you got in Anaysis Report(word file) and label it as Question 4: 5 points) • Build a pessimistic case based on the provided data, analyze the results (Analyzing the base case results you got in Anaysis Report(word file) and label it as Question 5: 5 points)

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• Run sensitivity analysis on the key variables to this business, analyze the results(Analyzing results of sensitivity analysis in Analysis Rerport (word file) and label it as Question 6: 5 points) • Run a break-even analysis on the key variables and analyze the results. (Analyzing results of break even analysis in “Analysis Report” (word file) and label it as Question 7: 5 points) • Determine NPV, IRR, PI, Payback Period for base case (Analyze the results in “Analysis Report” (word file) and label it as Question 8: 5 points) • Determine NPV, IRR, PI, Payback Period for optimistic case (Analyze the results in “Analysis Report” (word file) and label it as Question 9: 5 points) • Determine NPV, IRR, PI, Payback Period for pessimetic case (Analyze the results in “Analysis Report” (word file) and label it as Question 10: 5 points)

5) Add a cover page as the first page of the “Aanalysis report”(word file). On the cover page, it

should have your group number and the names of group members. Note that it is your group’s decision whose name should be included on the cover page based on the group member’s contribution to the team project. If one or two group members decide to do the project separately from the rest of the group, he/she must submit all the files required independently to the canvas and the cover page includes your or your teammate’s names only. If a group member’s name does not appear in any report submitted in the canvas, grade points will not be given.

6) One group only needs one group member to submit all files to the Canvas but make sure you include all members’ names who contributed to the group assignment in the analysis report.