Question
For the Options Section within the Business Case: An important part of market analysis is preparing financial projections. Prepare a spreadsheet that can be used
For the Options Section within the Business Case: An important part of market analysis is preparing financial projections. Prepare a spreadsheet that can be used to determine the profit potential of getting into the sport game market. Include inputs for the initial investment cost, number of customers in the first month, customer growth rate/month, monthly rental fee/customer, and fixed and variable monthly operating costs. Determine how long it would take to breakeven (recover the investment cost without discounting, for now), and projected profits/losses for the first twelve months in operation. If needed, use a discount rate of 8%. Assume the following three scenarios:
| Most likely | Pessimistic | Optimistic |
Year 0 investment cost: | $400,000 | $800,000 | $200,000 |
Number of customers in month 1: | 2,000 | 1,000 | 3,000 |
Monthly customer growth rate: | 20% | 10% | 25% |
Monthly rental fee/customer: | $20 | $15 | $25 |
Fixed monthly operating costs: | $20,000 | $30,000 | $15,000 |
Monthly operating costs/customer: | $5 | $8 | $4 |
Create a Financial Analysis for this project having a preliminary estimate of $200,000 for the entire project. Assume a one-year project and discount rate of 8% in calculating the NPV, ROI, and payback period.
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