Reference no: EM131119456
Unit 5 Individual project
A quaint but well-established coffee shop, the Hot New Cafe, wants to build a new cafe for increased capacity. Expected sales are $800,000 for the first 5 years. Direct costs including labor and materials will be 50% of sales. Indirect costs are estimated at $100,000 a year. The cost of the building for the new cafe will be a total of $750,000, which will be depreciated straight line over the next 5 years. The firm's marginal tax rate is 37%, and its cost of capital is 12%.
For this assignment, you need to develop a capital budget. It is important to know what the cafe managers should consider within their capital budget. You must also define the key terms necessary to understand capital budgeting. In this assignment, please show all work, including formulae and calculations used to arrive at financial values. You must answer the following:
- Using the information in the assignment description:
- Prepare a capital budget for the Hot New Cafe with the net cash flows for this project over a 5-year period.
- Calculate the payback period (P/B) and the net present value (NPV) for the project.
- Answer the following questions based on your P/B and NPV calculations:
§ Do you think the project should be accepted? Why?
§ Define and describe Net Present Value (NPV) as it pertains to the new cafe.
§ Define payback period. Assume the company has a P/B (payback) policy of not accepting projects with life of over 3 years. Do you think the project should be accepted? Why?
Your submitted assignment must include the following:
o A double-spaced, two page Word document that contains answers to the word questions.
o You must include a Microsoft Excel spreadsheet for your calculations.
o Either the Word document or the Excel spreadsheet must have all of your calculation values, your complete calculations, any formulae that you used, the sources you wish to cite, and your answers to the questions listed in the assignment guidelines.
Please submit your assignment.
Your assignment will be graded in accordance with the following criteria. Click here to view the grading rubric.
This assignment will also be assessed using additional criteria provided here.
For assistance with your assignment, please use your text, Web resources, and all course materials.
|
Find examples of operations and supply chain strategies
: Using newspaper, magazines, or the Internet, find examples of operations and supply chain strategies. Write a few paragraphs describing the situation and the strategies being pursued.
|
|
Explanation of what a managed care organization
: An explanation of what a managed care organization (MCO) is and how MCOsevolved. The identification of the accrediting bodies for MCOs and an explanation of the types of care they oversee
|
|
What do you think about employee privacy
: What do you think about "employee privacy?" In a post-9-11world, would this also include a discussion of personal information collection, protecting privacy, Internet security, and e-mail security? This topic can be a "hot button" between employers a..
|
|
Analysis builds up to an interesting point about the poem
: Using one of the two techniques from the video above, write a paragraph that is at least 200 words long that engages directly with the text of Walis Nokan's poems. Be sure that your analysis builds up to an interesting point about the poem or poem..
|
|
Build a new cafe for increased capacity
: A quaint but well-established coffee shop, the Hot New Cafe, wants to build a new cafe for increased capacity. Expected sales are $800,000 for the first 5 years. Direct costs including labor and materials will be 50% of sales.
|
|
Discuss the current status of the organization
: Each student will select one of the scenarios below and develop a 10-12 slide PowerPoint presentation to discuss the current status of the organization, provide an overview of the organization, and make recommendations on how to manage the selecte..
|
|
Victoria secret perfume
: Victoria's secret is one of the most powerful, hot brands in the world; they are the main leading specialize retailer of cozy clothing and excellent items, likewise offering , sleepwear, hosiery, and design. They are headquartered in Columbus, Ohi..
|
|
Selected genre using a feature-length film
: After reviewing the discussion of genre in Chapter 4 of Film: From Watching to Seeing, demonstrate your understanding of one selected genre using a feature-length film.
|
|
Respiratory and pharmacologic therapy
: All of the necessary documentation required by the insurance company is completed, including the physician's opinion that the patient would be unable to work in the future, as his pulmonary function is markedly impaired in spite of continual respi..
|