BUS 5111 Financial Management Unit 2 Written Assignment (WA)
Assignment Guide
BUS5111 Unit 2 Written Assignment
Question
Submit a written paper which is 2-3 pages in length, exclusive of the reference page. The
Abstract is not required or needed. Papers should be double spaced in Times New Roman font
which is no greater than 12 points in size. The paper should cite at least one source
independent of the textbook.
In this paper, please discuss the following case study. In doing so, explain your approach to the
problem, support your approach with references, and execute your approach. Provide an
answer to the case study’s questions with a recommendation.
You and your lifelong friend are partners together in the promotional materials business. That
is, when marketing firms and their clients begin advertising or public relations campaigns, they
come to your company to obtain the materials and products that would support the ad
campaign. Examples of the materials and products you supply are printed posters, signs, T-
shirts with printed logos, key chains, and other such items. You supply these items by procuring
them from other sources or in some cases you manufacture them using various equipment in a
warehouse you use near the center of the city. Your company’s name is WePROMOTE.
You and your business partner are planning the next major project for your company. The
project is a significant step in the growth of your firm in that the project will generate cash
inflows into the firm for many years into the future. However, there will be a large investment
of funds required by the firm to launch the project. The planning is in its preliminary stages
where the numbers and other data are gross estimates. Despite the “fuzzy numbers”, you and
your partner still need to decide whether the project will be worth pursuing.
The following is some of the estimated data you have:
You both decided to finance the project using your own funds.
The cost of the equipment will be $80,000 and this cost is incurred prior to any cash is
received by the project.
The expected cash inflows are the most variable of the estimates. Your partner is convinced
that the firm will receive $14,000 annually for 7 years. You have your doubts. You think it is
more reasonable that there will be cash inflows of $14,000 in year 1, then inflows of
$16,000 from years 2-4, and then inflows of $17,000 for years 5-7.
You both agree that after 7 years, the equipment will stop working and can be sold for its
parts for about $5,000.
You both consider a discount rate of 7% but remain open to other future possibilities.
Page 1 of 5
, BUS 5111 Financial Management Unit 2 Written Assignment (WA)
You trust your partner’s instincts and agree to start analyzing the feasibility of the project. The
first step is to perform net present value (NPV) calculations for the project using your partner’s
estimates and then using your estimates.
Requirements of the paper:
Perform the two NPV calculations and provide a narrative of how you calculated both
computations and why. Your answer must be justified.
Present your calculated answers in schedule format (a table) along with your narrative.
Microsoft Excel is also recommended for calculating and creating a table (your schedule).
Then provide a summary conclusion on whether you should continue to pursue this
business opportunity.
Finally, assuming your partner remains unconvinced of your conclusion, present relevant
points of your analysis that you believe are compelling and persuasive in supporting your
position.
Papers will be assessed using the following criteria:
Accurate NPV calculations are provided
A narrative that fully explains how NPVs were calculated and why is included
A clear, logical summary and conclusion is given
A compelling and persuasive analysis in supporting your position
Basic Concepts to Master
This assignment requires you to demonstrate your understanding of:
Net present value (NPV) for a project involving expected future cash flows.
Suggested Answer Guide
The paper should contain at least the following sections.
Title Page
o To comply with APA style, papers should have a title page.
You may follow this format for student papers:
Page 1
Page 2 of 5
Assignment Guide
BUS5111 Unit 2 Written Assignment
Question
Submit a written paper which is 2-3 pages in length, exclusive of the reference page. The
Abstract is not required or needed. Papers should be double spaced in Times New Roman font
which is no greater than 12 points in size. The paper should cite at least one source
independent of the textbook.
In this paper, please discuss the following case study. In doing so, explain your approach to the
problem, support your approach with references, and execute your approach. Provide an
answer to the case study’s questions with a recommendation.
You and your lifelong friend are partners together in the promotional materials business. That
is, when marketing firms and their clients begin advertising or public relations campaigns, they
come to your company to obtain the materials and products that would support the ad
campaign. Examples of the materials and products you supply are printed posters, signs, T-
shirts with printed logos, key chains, and other such items. You supply these items by procuring
them from other sources or in some cases you manufacture them using various equipment in a
warehouse you use near the center of the city. Your company’s name is WePROMOTE.
You and your business partner are planning the next major project for your company. The
project is a significant step in the growth of your firm in that the project will generate cash
inflows into the firm for many years into the future. However, there will be a large investment
of funds required by the firm to launch the project. The planning is in its preliminary stages
where the numbers and other data are gross estimates. Despite the “fuzzy numbers”, you and
your partner still need to decide whether the project will be worth pursuing.
The following is some of the estimated data you have:
You both decided to finance the project using your own funds.
The cost of the equipment will be $80,000 and this cost is incurred prior to any cash is
received by the project.
The expected cash inflows are the most variable of the estimates. Your partner is convinced
that the firm will receive $14,000 annually for 7 years. You have your doubts. You think it is
more reasonable that there will be cash inflows of $14,000 in year 1, then inflows of
$16,000 from years 2-4, and then inflows of $17,000 for years 5-7.
You both agree that after 7 years, the equipment will stop working and can be sold for its
parts for about $5,000.
You both consider a discount rate of 7% but remain open to other future possibilities.
Page 1 of 5
, BUS 5111 Financial Management Unit 2 Written Assignment (WA)
You trust your partner’s instincts and agree to start analyzing the feasibility of the project. The
first step is to perform net present value (NPV) calculations for the project using your partner’s
estimates and then using your estimates.
Requirements of the paper:
Perform the two NPV calculations and provide a narrative of how you calculated both
computations and why. Your answer must be justified.
Present your calculated answers in schedule format (a table) along with your narrative.
Microsoft Excel is also recommended for calculating and creating a table (your schedule).
Then provide a summary conclusion on whether you should continue to pursue this
business opportunity.
Finally, assuming your partner remains unconvinced of your conclusion, present relevant
points of your analysis that you believe are compelling and persuasive in supporting your
position.
Papers will be assessed using the following criteria:
Accurate NPV calculations are provided
A narrative that fully explains how NPVs were calculated and why is included
A clear, logical summary and conclusion is given
A compelling and persuasive analysis in supporting your position
Basic Concepts to Master
This assignment requires you to demonstrate your understanding of:
Net present value (NPV) for a project involving expected future cash flows.
Suggested Answer Guide
The paper should contain at least the following sections.
Title Page
o To comply with APA style, papers should have a title page.
You may follow this format for student papers:
Page 1
Page 2 of 5
