Question 13 (20 Marks) (48 Minutes) The Snow Shield You are a consultant that specializes in project evaluations and have been hired by Santa Clausen (SCI), SCi operates a thriving to delivery business, delivery toys throughout the world. With gas prices climbing at an alarming rate the owner of SC, Santa, is contemplating opening up a distribution centre in Canada to contemplate his centre in the North Pole sor's revenue comes from the royaltiespaid by companies such as Mattel whenever Santa uses their toys to deliver to the kids.penses include utilities, salaries to the Elves and other expenses. Based on the information provide below you have been asked to determine using a ne present analysis, if Santa should go ahead with his Centre Your consultant's fee for providing this analysis is $30,000 Santa expects that this Canadian venture wil en in years The distribution centre will be leased in Canada by sciat a cost of 50,000 per year Revenues are expected to be as follows Years 1-5 an increase of $500,000 each year Years 5565.000 year 75555,000 and years 5550.000 A Sled will be porchased just for this distincent et wit NOT be purchased it the Canadian venture does not proceed. The cost of the Sledi S800.000 The Salvage value at the end of year is expected to be $120.000 increased salaries for the new centre espected to be 560.000 per year for each of the Years Utilities are expected to be 15% of early even Schexpects an addition working capitatement of $250,000 at the beginning the amount will be recovered at the end of war Theves that would have to move to the North Polere not happy about the Centre Canada theme is warmer then they would want is offered to the onetune bons of S15.000 ton that will be treated all the the end of The discount on antan 10 1 WCMC MOPPS Canada as the climate is warmer there then they would want. SCI has offered to pay them a onetime bonus of $15,000 (total amount that will be distributable to all the Elves), payable at the end of year 6. e is 10%. Ignore any taxes. In addition to the above, Santa would like you to prepare a BRIEF memo to him that outlines the limitations of the analysis you have completed above as well as any other risks that he should be aware of if he goes ahead with this venture. Page 4 of Question 13 (20 Marks) (48 Minutes) The Snow Shield You are a consultant that specializes in project evaluations and have been hired by Santa Clausen (SCI), SCi operates a thriving to delivery business, delivery toys throughout the world. With gas prices climbing at an alarming rate the owner of SC, Santa, is contemplating opening up a distribution centre in Canada to contemplate his centre in the North Pole sor's revenue comes from the royaltiespaid by companies such as Mattel whenever Santa uses their toys to deliver to the kids.penses include utilities, salaries to the Elves and other expenses. Based on the information provide below you have been asked to determine using a ne present analysis, if Santa should go ahead with his Centre Your consultant's fee for providing this analysis is $30,000 Santa expects that this Canadian venture wil en in years The distribution centre will be leased in Canada by sciat a cost of 50,000 per year Revenues are expected to be as follows Years 1-5 an increase of $500,000 each year Years 5565.000 year 75555,000 and years 5550.000 A Sled will be porchased just for this distincent et wit NOT be purchased it the Canadian venture does not proceed. The cost of the Sledi S800.000 The Salvage value at the end of year is expected to be $120.000 increased salaries for the new centre espected to be 560.000 per year for each of the Years Utilities are expected to be 15% of early even Schexpects an addition working capitatement of $250,000 at the beginning the amount will be recovered at the end of war Theves that would have to move to the North Polere not happy about the Centre Canada theme is warmer then they would want is offered to the onetune bons of S15.000 ton that will be treated all the the end of The discount on antan 10 1 WCMC MOPPS Canada as the climate is warmer there then they would want. SCI has offered to pay them a onetime bonus of $15,000 (total amount that will be distributable to all the Elves), payable at the end of year 6. e is 10%. Ignore any taxes. In addition to the above, Santa would like you to prepare a BRIEF memo to him that outlines the limitations of the analysis you have completed above as well as any other risks that he should be aware of if he goes ahead with this venture. Page 4 of
