Project 2: Capital Budgeting Preference Decision
Scenario:
Your client owns a successful restaurant in downtown Chicago.
The client wants to open a 2nd restaurant in the suburbs and has asked you to help choose between
two locations. Key information is listed below. Using the four capital budgeting methods that we have focused on
in this module, prepare a presentation that shows your recommendation(s) to your client (and why).
				Oak Park		Rosemont
Initial Investment:						(see your specific investment amount)
Annual cash inflows:				$1,000,000		$1,200,000
Annual cash outflows:				$600,000		$850,000
Annual non-cash (all depreciation) expenses:
Use straight line depreciation to find!
# of years of expected useful life of project:				25		30
For both, assume no residual value and:						(see your specific discount rate)
Use textbook Exhibit 14B-2 (or the annuity document/chart in this module) where applicable.
PROJECT 2 REQUIREMENTS:
Prepare a PowerPoint presentation that you would give/show to your client that clearly
identifies your recommendation as to which location she should select to open the second restaurant.
Additional MUST HAVES, include clearly identified calculations of the four capital budgeting methodologies we have
used (showing your work/calculations, not the work of Google, a high-end calculator, Excel programmers or outside apps!)
in this module)
And provide sufficient (and appropriate) information on what these metrics mean, particularly as it relates to your
preference decision.
Submit as appropriate on Blackboard (I would also recommend "saving" your documents just in case!)
no later than Friday, July 14 at 11:59 PM (as always, sorry, no extensions!)
Note: Google docs (instead of PowerPoint) cannot be accepted. However, if you prefer to use
an alternative presentation method, let the instructor know.
PROJECT 2 SCORING/GRADING:
In the format and substance described in the Requirements above:
All four (for each location) clearly identified and correctly shown calculated capital budgeting methodologies will earn
12 points (8 answers x 1.5 points each = 12; thus -1.5 for any incorrect or missing answers).
Then for the (up to) additional potential 8 points (for the 20 point project maximum score):
8 points for a solid, clear and conclusive (consistent with chapter content) presentation and selection of "best" location.
with appropriate reasoning as to why.
However, -2 to -8 points for anything insufficient, unclear, inconclusive, and/or mis-interpretations of what the metrics
mean, as well as spelling, grammar, etc. issues (presentations to clients must be flawless!).
And no credit if it appears that metrics were derived from non-class content.
Note: creativity is encouraged, so you can earn 1 - 3 additional points (up to 20 point project maximum)
for over-and-above creativity, graphics, etc. (this is still an accounting course, but fun is allowed!)
Again, Late submissions (anything after Friday, July 14 at 11:59 PM) cannot be accepted (i.e., 0 points).
An overall summary of project results will be posted after the project due date.
Questions? Just let me know!
Individual student investment amount (for each location) and discount rate to use, respectively:

Jenny

$ 2,500,000

10%