Part 1.- M7 Project 1

Chang Dental Read the instructions and the attached Excel spreadsheet thoroughly before starting the project!

Objectives:

1. Perform a qualitative analysis on a capital budgeting project.

2. Perform a valuation analysis on an existing business.

3. Perform scenario analysis (that makes business sense!) :

1. Discuss the risks and rewards of investing in Chang Dental from Chris Millers perspective using a SWOT analysis.

2. Discuss the base case valuation provided to you.

3. Run scenario analyses on key variables using information from the case.

4. Make your final recommendation on whether or not Chris Miller should buy Chang Dental.

Tips:

Task 1: Use the information given in the case, but dont be afraid to include your own experiences with dentists in your analysis.

Task 2: Use the Excel file posted. In sheets "Exh1" and "Exh2" are the financial statement data. In sheet "Base_Case" is the completed base case valuation forecast. M7_Project_1_Class.xlsxDownload M7_Project_1_Class.xlsx Task 3: Use the case as a guide for scenarios. Do not just randomly make scenarios.

Submission Instructions:You should submit your completed work in a Word document and Excel file. M7 Project 1. class. xlsx

Chang Dental Clinic

Exhibit 1

INCOME STATEMENTS For the year ended December 31

2005. 2004. 2003. 2005 2004 2003

FEE REVENUE. $812,987 $600,308 $287,281. g. 35.4% 109.0%

OPERATING EXPENSES:

Associate fees. 166,727 106,486. 40,098. 0.205 0.177. 0.140

Salaries and benefits 127,703. 93,868. 39,008.

Dental supplies. 62,715. 40,508 26,291 0.077. 0.067. 0.092

Equipment leasing. 52,582. 52,582. 19,456 $387,00810-yearcapital of leases

Rent and utilities. 42,441 38,500. 29,428

Laboratory fees. 21,626 10,636 186 0.027. 0.018. 0.001

General and Office 17,420 1.4,193 9,051

Promotion and Entertainment. 10,775 8,172. 794

Automobile expenses. 5,104 3,677 1,337.

Telephone 11,187 1,251 4,697

Professional fees. 5,910 3,294. 5,755

Interest and bank charge. 5,630. 7,015. 13,579

Professional development. 2,913. 406 2,021

Insurance 2,778. 1,612. 849

Licenses, fees and dues. 1,843. 2,685. 1,282

Bed debts (recovered). (3,647) 17,939 339

Amortization. 14,872 10,484. 8,687. 0.309. 0.263 0.232 v

TOTAL EXPENSES 548,579 413,308 202,858 368,074 F includes draw

NET INCOME. $264,408. $187,000. $84,423

Cash operating costs $191,324. $116,919. $42,701