Problem:
Every company has capital projects.
- Verizon wireless is building a data center in Niagara County NY. The initial investment breaks down like this:
- Land and utilities, $60 million.
- Estimated building cost, $500 million.
- Phase 1 equipment, 2011-13, $640 million.
- Phase 2 equipment, 2014-15, $800 million.
- Phase 3 equipment, 2016-21, $2 billion.
- Equipment maintenance and miscellaneous, $500 million.
Once you have identified the new possible investment item, what problems are you going to have in estimating the cash flow that might be emanating from the initial investment and problems in getting it funded? Issues might be:
- Risk
- Cost
- Politics (getting it through committees)
- Public Relations
Write a short summary of the problems you see in getting the funding to see it through.
It must discuss both the estimates of the initial investments and the annual incremental after-tax cash flow that is expected to emanate from the investment.