Field Turf Cost Breakdown: Base preparation and installation Materials 1st Year Maintenance $ 580,000 $ 820,000 $ 100,000 $1,500,000 Total Cost The Campus in Beaverton, Oregon is home to Nike's World Headquarters. In addition to a number of architecturally beautiful office buildings, such as Steve Prefontaine Hall, Tiger Woods Center, and the Michael Jordan Building, the campus also has an employee wellness center named after the famous Bo Jackson. The center and accompanying field are used for employee fitness classes, product testing, and sponsored athlete workouts. Due to a savings of nearly $150,000 per year on field maintenance by replacing the natural grass that accompanies the Bo Jackson wellness center with artificial field turf, the Nike managerial team is proposing to replace the current natural grass field with a field turf surface. Although the Nike managerial team is convinced that field turf is the correct choice to make, they are unsure of how to finance the required initial start-up costs of $1,500,000. As a result, they have contacted you to receive guidance on this important and potentially difficult financing problem. The situation is as follows: The Nike managerial team has access to three sources of financing: General funds from previous year's profits (retained earnings), maximum allowance = $350,000. Approval to issue a bond package, with a $850,000 maximum. Approval to take out a maximum of $650,000 in direct loans from a local bank. Your task is to determine a financing package that makes the most sense. How much retained earnings should they use? How many bonds should they issue? How much should they finance with direct loans? Your task includes four parts: (1) Determine the amounts of retained earnings, bonds, and direct loans to take out fat Your task is to determine a financing package that makes the most sense. How much retained earnings should they use? How many bonds should they issue? How much should they finance with direct loans? Your task includes four parts: (1) Determine the amounts of retained earnings, bonds, and direct loans to take out (2) Price out the annual debt service for the financing package you've created (i.e., create an amortization schedule for the loan and a bond payment schedule for the bond package). What will the annual payment amount be for the upcoming years? Also, determine the total cost of the entire financing package once it has all been paid off, including interest. (3) Write a persuasive discussion of why this financing mix is an optimal solution. Remember if you choose to use retained earnings, your discussion should include information about opportunity costs. (3- 7 sentences). (4) Now flip the script. Say you are now an investor looking to purchase bonds as a part of your investment portfolio. At what price would you be willing to purchase the bonds described above? Only the original material, installation, and first year maintenance should be included in your financial needs assessment. The annual maintenance in the future will be covered by general operational revenues, and will not require additional financing. Your financing mix should be determined (and turned in) using excel. You'll be graded based on completion, accuracy, and logical reasoning. (worth 5 pts) Bond Package Details: Par value Coupon Value Yield - $1,000 ($850k max) -5.35% - 8% Retained Earnings: Maximum Amount Interest Rate Payment Amount -$350,000 -0.00 -0.00 Bond Package Details: Par value Coupon Value Yield -$1,000 ($850k max) -5.35% -8% - 10 years Length Interest paid out annually Bank Loan Details: Maximum Amount Interest Rate Interest Compounded Length Payments due annually - $650,000 max -6.25% -Yearly -10 years Retained Earnings: Maximum Amount -$350,000 -0.00 -0.00 Interest Rate Payment Amount Opportunity Costs - Substantial - Use of retained earnings are awarded based on competitive grounds. Request must persuade a funding committee of need, usefulness, and appropriateness of project. Field Turf Cost Breakdown: Base preparation and installation Materials 1st Year Maintenance $ 580,000 $ 820,000 $ 100,000 $1,500,000 Total Cost The Campus in Beaverton, Oregon is home to Nike's World Headquarters. In addition to a number of architecturally beautiful office buildings, such as Steve Prefontaine Hall, Tiger Woods Center, and the Michael Jordan Building, the campus also has an employee wellness center named after the famous Bo Jackson. The center and accompanying field are used for employee fitness classes, product testing, and sponsored athlete workouts. Due to a savings of nearly $150,000 per year on field maintenance by replacing the natural grass that accompanies the Bo Jackson wellness center with artificial field turf, the Nike managerial team is proposing to replace the current natural grass field with a field turf surface. Although the Nike managerial team is convinced that field turf is the correct choice to make, they are unsure of how to finance the required initial start-up costs of $1,500,000. As a result, they have contacted you to receive guidance on this important and potentially difficult financing problem. The situation is as follows: The Nike managerial team has access to three sources of financing: General funds from previous year's profits (retained earnings), maximum allowance = $350,000. Approval to issue a bond package, with a $850,000 maximum. Approval to take out a maximum of $650,000 in direct loans from a local bank. Your task is to determine a financing package that makes the most sense. How much retained earnings should they use? How many bonds should they issue? How much should they finance with direct loans? Your task includes four parts: (1) Determine the amounts of retained earnings, bonds, and direct loans to take out fat Your task is to determine a financing package that makes the most sense. How much retained earnings should they use? How many bonds should they issue? How much should they finance with direct loans? Your task includes four parts: (1) Determine the amounts of retained earnings, bonds, and direct loans to take out (2) Price out the annual debt service for the financing package you've created (i.e., create an amortization schedule for the loan and a bond payment schedule for the bond package). What will the annual payment amount be for the upcoming years? Also, determine the total cost of the entire financing package once it has all been paid off, including interest. (3) Write a persuasive discussion of why this financing mix is an optimal solution. Remember if you choose to use retained earnings, your discussion should include information about opportunity costs. (3- 7 sentences). (4) Now flip the script. Say you are now an investor looking to purchase bonds as a part of your investment portfolio. At what price would you be willing to purchase the bonds described above? Only the original material, installation, and first year maintenance should be included in your financial needs assessment. The annual maintenance in the future will be covered by general operational revenues, and will not require additional financing. Your financing mix should be determined (and turned in) using excel. You'll be graded based on completion, accuracy, and logical reasoning. (worth 5 pts) Bond Package Details: Par value Coupon Value Yield - $1,000 ($850k max) -5.35% - 8% Retained Earnings: Maximum Amount Interest Rate Payment Amount -$350,000 -0.00 -0.00 Bond Package Details: Par value Coupon Value Yield -$1,000 ($850k max) -5.35% -8% - 10 years Length Interest paid out annually Bank Loan Details: Maximum Amount Interest Rate Interest Compounded Length Payments due annually - $650,000 max -6.25% -Yearly -10 years Retained Earnings: Maximum Amount -$350,000 -0.00 -0.00 Interest Rate Payment Amount Opportunity Costs - Substantial - Use of retained earnings are awarded based on competitive grounds. Request must persuade a funding committee of need, usefulness, and appropriateness of project