7 WIL PROJECT Program Name: BMHT Project Code: CPL-5559-BMHT-0014-V2 WIL PROJECT WIL PROJECT CASE STUDY ORIENTATION WEEK 2 Applicable VLOs for This Weeks Case Study 2. Integrate knowledge of capital investments, credit planning, and finance into relevant aspects of work. This Weeks Detailed Case Study Information Finance was your favorite subject at Lambton College. After joining the labour force, you realized the value of your education from Lambton College, and now comes the time to apply this knowledge. You will utilize your knowledge of capital investments, credit planning, and finance, to recommend the best course of action for the company. TR is a manufacturing company, specialized in auto parts. The company has a strong market position, which it maintains by investing in innovative technology. The company manufactures everything from small bolts to bigger parts such as doors and engine components. TR Company is considering replacing some of its equipment. The company analyzed the future cash flows and the expected costs for each piece of equipment and came up with three options. The options and the cost of financing each option is listed below: Option A Year Cash Flow Comment 2021 $ (1,500,000.00) Includes installation costs 2022 $ 350,000.00 2023 $ 450,000.00 2024 $ 150,000.00 2025 $ 600,000.00 2026 $ 150,000.00 2027 $ 150,000.00 2028 $ 75,000.00 2029 $ 600,000.00 Includes salvage value Cost of Financing 11% Option B Year Cash Flow Comment 2021 $ (3,000,000.00) Includes installation costs 2022 $ 75,000.00 2023 $ 45,000.00 2024 $ 1,050,000.00 2025 $ 1,200,000.00 2026 $ 750,000.00 2027 $ 750,000.00 2028 $ 600,000.00 2029 $ 600,000.00 Includes salvage value Cost of Financing 12% Option C Year Cash Flow Comment 2021 $ (10,000,000.00) Includes installation costs 2022 $ 1,500,000.00 2023 $ 3,000,000.00 2024 $ 4,500,000.00 2025 $ 150,000.00 2026 $ 150,000.00 2027 $ 150,000.00 2028 $ 1,050,000.00 2029 $ 300,000.00 Includes salvage value Cost of Financing is 13% Your task is analyzing the three options, and deciding which option is the best. The companys only requirement is that payback period should not exceed 5 years. Your decision criteria should incorporate; NPV, IRR and payback period. In order to finance this project, the company has three options: Line of Credit Secured Loan Issuing debentures Which option should be selected and why (assume same cost of financing for each option)? Deliverables, Format and Marking Scheme for This Weeks Case Study Evaluation: Correct calculation of: NPV, IRR, and Payback (2%) Correct project selection (1%) Selecting the appropriate credit facility, and justifying the selection (2%) Note: assume any missing information. Clearly state your assumptions in your submissions. Summarize your findings in a two-page word document.