Babson - Sneaker 2013 Case - About New Balance determining if there "Sneaker 2013" is the best interest of the company of if Persistence (hiking shoe) is a better/safe option?

1. Should the following be included in the capital budgeting cash flow projection?

   • building a factory and purchase/installation of the equipment

   • Research and Development costs

   • cannibalizations of other sneaker sales

   • interest costs

   • change in current asset/current liability accounts

   • taxes

   • cost of goods sold

   • advertising and promotion costs

   • depreciation costs

2. Produce a projected capital budgeting cash flow statement for the Sneaker 2013 projects by answering the following

   • What is the project's initial investment outlay?

   • What are the project's annual (2013-2018) net operating cash flows?

   • What is the project's terminal non operating net cash flow?

   • Does Sneaker appear viable from a quantitative standpoint? Estimate project's payback, NPV and IRR.

3. What is your final recommendation to Rodriguez?