Create atwo-page single space memorandum plus appendices about a sports bar wanting to open downtown in an urban area that's open 7 days a week creating a capital budgeting project using capital budgeting analysis. Collect relevant data, research relevant information regarding implementation of the project and perform the necessary analysis to determine if the project should be undertaken.It may be appropriate to keep the project simple so that it is tractable. It is also true that too simple of a project would not reflect well on your ability depth of financial analysis.
Follow the computational part of the case:
1) Initial cash flows, operating cash flows and terminal cash flow.
2) Payback; IRR; NPV; NPV profile.
3) Sensitivity analysis
4) Be clear regarding how the project is to be finance and integrate inflation into your analysis.
5) Summarize what type of capital budgeting project you are considering
6) How will the project be financed? What is the cost of capital for you project - what is this number based on? What is your WACC for your project?
The memorandum should contain at least 4 sections:
1) Contain an introduction
2) Provide any necessary explanation and background to understand the project.
3) Summarize the results that are included in the appendix. The writer should reference key computations including calculations 1-4 outlined above.
4) Provide some type of concluding comments.
The memo will be graded based on the following:
1) Completeness and Accuracy of Attachments: ________ out of 25
(Contain the required computations and financial analysis)
2) Written content of the memorandum: _________out of 25
(logic of presentations; ability to effectively integrate computations into written memo)
3) Grammar, spelling, punctuation and appearance (self explanatory) __________ out of 15
4) Financial Reasoning of the analysis __________ out of 35
(correct use of finance concepts)