The assignment is a two-page memorandum plus appendices that suggests a possible investment in an asset. The student is responsible to think of a possible capital budgeting project; collect relevant data; research relevant information regarding implementation of the project and perform the necessary analysis to determine if the project should be undertaken.

Students should at a minimum consider the following in the computational part of the case:

1) Initial cash flows, operating cash flows and terminal cash flow.

2) Payback; IRR; NPV; NPV profile.

3) Sensitivity analysis

4) Be clear regarding the use of debt and integrate inflation into your analysis.

This assignment is very similar to the convenience store case completed in week seven except you need to develop the project yourself.

The memorandum should contain at least 4 sections:

1) Contain an introduction

2) Provide any necessary explanation and background to understand the project.

3) Summarize the results that are included in the appendix. The writer should reference key computations including calculations 1-4 outlined above. The actual computations and or explaining the computations should be in the appendix. The memorandum should be written assuming that the reader understands the material in this course. When you write you will share the specific details and results associated with the project.

4) Provide some type of concluding comments.

Everything you turn in will be either created in Microsoft Word or Excel. Two page maximum (single-spaced) applies to the memorandum (the excel files can contain many pages). Neatness counts. Late papers will be penalized at least 30%.

Example of Memorandum

To: Executive Trainees

From: Professor Clarke, Professor of Business

Date: December 15, 2004

Subject: Two-page memorandum

This memorandum is written to provide a format to assist in the preparation of your "memo." Cover memorandums, sometimes called executive summaries, are very common in business. Their purpose is to give busy managers a quick summary of an attached, usually lengthy, report or article. If the memorandum is properly written, a busy executive can read the memorandum and get a complete understanding of the important contents of an attached report or article. Memorandums usually consist of a few paragraphs, and for the most part are less than two pages long.

Memorandums are also used to communicate important information without an attached report or article. In fact, they are the principle means by which business executives in large companies communicate with each other internally. External communications, where executives are communicating with someone outside of their organization, is done with a letter format. This should make sense to you as it is obviously superfluous for executives within the same company to address correspondence to one another when the material will be sent to another office within the same building.

Hopefully, you now understand why I have asked you to write a report that uses the memorandum format. Although term papers and case analyses are important assignments, most of you will not be asked to write lengthy reports at your place of employment. More than likely, however, you will be asked to write a "memo."