Project activity week 6

Walter A Corrigan: Collection in year 5 of the terminal value of PPE + working capital from the year 0 initial investment. This is the total of the used FMV of your CapEx budget PPE property, plant & equipment + 100% of any investment in inventory. Any funds invested in year 0 to pay startup expenses before the grand opening are not included in the year 5 terminal value of the project - they are a year 1 income statement cost (the owner ate these costs).

Walter A Corrigan: Year 0 beginning cash is $0. Any cash borrowed will show up in the ending cash balance as year 0 net cash financing minus cash disbursements.

Walter A Corrigan: Project net cash flows include operating cash flows and investing cash flows but not financing cash flows. The net cash flows can be used to calculate your investment metrics such as NPV, IRR, profitability index and payback.

Walter A Corrigan: Enter amount borrowed. The loan amount should be sufficient to cover Section 3.0 CapEx, start-up expenses before the grand opening, an initial inventory if applicable, and probably a contingency fund in the checking account. I would not borrow funds after year 0. If additional external financing is needed enter an owner investment on row 40 in one or more years 0 - 5. You can also show an owner investment repayment by entering a minus amount.

Walter A Corrigan: Leave this at 5 years.

Walter A Corrigan: The interest should be entered on the income statement as interest expense.

Walter A Corrigan: Enter collections from sales.

Walter A Corrigan: Enter expenses as positive amounts from the income statement that affect cash. Depreciation and TCE route purchase amortization do not affect cash.

Walter A Corrigan: Your first year is either 2016 or 2017.

Walter A Corrigan: I would not borrow funds after year 0. If additional external financing is needed enter an owner investment on row 40 in one or more years 0 - 5. You can also show an owner investment repayment by entering a minus amount.

WalterC: Year 0 loan payment: No payment in year 0 which is the day the money is borrowed. The first P&I payment is in year 1.

WalterC: Beg Cash Bal: You have written over the cell pointer. The Year 1 beginning cash balance is the same as the Year 0 ending cash balance, and so forth for each year.

WalterC: Capital Expenditures/Other Year 0 Cash Disbursements: Enter separate lines for Year 0 cash disbursements as positive numbers for spending on CapEx, startup expenses, and any opening inventory (if needed). The startup expenses should be new business expenses and necessary operating expenses for perhaps 4 – 8 weeks before the grand opening.