WIL PROJECT CASE STUDY ORIENTATION 3 2022 $ 432,000.00 4 2023 $ 648,000.00 5 2024 5 972,000.00 6 2025 5 1,188,000.00 7 2026 $ 336,960.00 8 2027 $ 1,512,000.00 92028 $ 1,684,800.00 10 2029 $ 2,160,000.00 Cost of Capital: 12% Includes Salvage Value Option B: 1136 Avenue Rd. Comment Includes Working Capital N Year Expected Cash flow 0 2019 $ 8,640,000.00 1 2020 $ 881,280.00 2 2021 $ 1,728,000.00 3 2022 $ 691,200.00 4 2023 $ 2,073,600.00 5 2024 $ 1,555,200.00 62025 $ 1,900,800.00 7 2026 $ 539,136.00 8 2027 $ 1,080,000.00 9 2028 $ 1,728,000.00 10 2029 S Cost of Capital: 12% 3,456,000.00 Includes Salvage Value WEEK Your task is to analyze the above capital projects, and reach a capital decision based on (IRR, NPV and Payback). In order to finance this project, the company has three options Line of Credit Secured Loan Corporate Credit Card Which option should be selected and why? WIL PROJECT CASE STUDY ORIENTATION Applicable VLOs for This Week's Case Study WIELK 2. Integrate knowledge of capital investments, credit planning, and finance into relevant aspects of work Brief Introduction to This Week's Case Study Debra started quick foods as a quick solution for busy professionals "QUICK FOODS" a 24/7 store, that specializes in groceries, and ready-made meal for busy professionals, just started operations in the local community. Debra, asked you to help her with finance and accounting This Week's Detailed Case Study Information QUICK FOODS Company is a successful business venture. It is expected that sales at the QUICK FOODS will increase substantially in the coming 5 years. Right now, the company occasionally runs out of inventory. To meet the increase in demand Debra is planning on expansion. Debra has two locations in mind each location has a unique value proposition. Debra gathered a lot of data, to make sure she is taking the right decision. First, she went out, and calculated the rent rates at each location. The rent is a running expense, it is not volatile, but it increases in-line with inflation. Next, Debra analyzed the neighborhood demographics this is an essential step which will enable forecasting future sales. The neighborhood demographics proved to be very similar. Both neighborhoods have a lot of middle-class working fomilies, which is the target market for QUICK FOODS Company. Moreover, Debra aho made sure to visit the local city council, in order to obtain more information on the required permits. The permit is essential, since zoning requirements could restrict certain business activities. After obtaining the information for each location. Debra started thinking about capital investments She researched the appropriate equipment which will be used in each store. She albo went out and talked to a couple contractors and obtained quotes for his suggested design and store layout. She was satisfied with pricing. Finally, Debra went to his financial manager and they together analyzed the required working capital financing for each location. The financial manager, used pro-forma financial statements to forecast the expected sales figure, cost of goods sold, and operating expenses. Also, the financial manager. made sure to calculate the "Weighted Average Cost of Capital, the stores will be financed via a mix of equity and debt. The financial manager summarized the key cash flows presented in the tables below), and she's eager to know the expected profitability for each project NPV, IRR, and Payback Period. It's expected that each store will require major renovations after 10 years, and thus the project life is imited to 10 years. I Option A: 5800 Yonge St. N Year 0 2019 Expected Cash flow $ 5,400,000.00 1 2020 $ 550,800.00 2 2021 $ 216,000.00 Comment Includes Working Capital WIL PROJECT CASE STUDY ORIENTATION Deliverables, Format and Marking Scheme for This Week's Case Study Your task is 2% Correct calculation of: NPV, IRR, and Payback 1% Correct project selection. 2% Selecting the appropriate credit facility and justifying the selection WEEK Note: you can make any necessary assumptions to solve this case. Clearly state your assumptions in your submission. I WIL PROJECT CASE STUDY ORIENTATION Applicable VLOS for This Week's Case Study WEEK 2. Integrate knowledge of capital investments, credit planning, and finance into relevant aspects of work Brief Introduction to This Week's Case Study Debra started quick foods as a quick solution for busy professionals. "QUICK FOODS" a 24/7 store, that specializes in groceries, and ready-made meals for busy professionals. just started operations in the local community. Debra, asked you to help her with finance and accounting. This Week's Detailed Case Study Information QUICK FOODS Company is a successful business venture. It is expected that sales at the QUICK FOODS will increase substantially in the coming 5 years. Right now, the company occasionally runs out of inventory. To meet the increase in demand Debra is planning an expansion. Debra has two locations in mind each location has a unique value proposition. Debra gathered a lot of data, to make sure she is taking the right decision. First, she went out, and calculated the rent rates at each location. The rent is a running expense, it is not volatile, but it increases in-line with inflation. Next, Debra analyzed the neighborhood demographics, this is an essential step which will enable forecasting future sales. The neighborhood demographics proved to be very similar. Both neighborhoods have a lot of middle-class working families, which is the target market for QUICK FOODS Company. Moreover, Debra also made sure to visit the local city council, in order to obtain more information on the required permits. The permit is essential, since zoning requirements could restrict certain business activities. After obtaining the information for each location, Debra started thinking about capital investments. She researched the appropriate equipment which will be used in each store. She also went out and talked to a couple contractors and obtained quotes for his suggested design and store layout. She was satisfied with pricing. Finally, Debra went to his financial manager and they together analyzed the required working capital financing for each location. The financial manager, used pro-forma financial statements to forecast the expected sales figure, cost of goods sold, and operating expenses. Also, the financial manager. made sure to calculate the "Weighted Average Cost of Capital", the stores will be financed via a mix of equity and debt. The financial manager summarized the key cash flows (presented in the tables below), and she's eager to know the expected profitability for each project; NPV, IRR, and Payback Period. It's expected that each store will require major renovations after 10 years, and thus the project life is limited to 10 years. Option A: 5800 Yonge St. N Year Expected Cash flow Comment 0 2019 -$ 5,400,000.00 Includes Working Capital 1 2020 $ 550,800.00 2 2021 $ 216,000.00 WIL PROJECT CASE STUDY ORIENTATION 3 2022 $ 432,000.00 4 2023 $ 648,000.00 5 2024 $ 972,000.00 6 2025 $ 1,188,000.00 7 2026 $ 336,960.00 8 2027 $ 1,512,000.00 9 2028 $ 1,684,800.00 10 2029 $ 2,160,000.00 Cost of Capital: 12% Includes Salvage Value Option B: 1136 Avenue Rd. Comment Includes Working Capital N Year Expected Cash flow 0 2019 -$ 8,640,000.00 1 2020 $ 881,280.00 2 2021 $ 1,728,000.00 3 2022 $ 691,200.00 4 2023 $ 2,073,600.00 5 2024 $ 1,555,200.00 6 2025 $ 1,900,800.00 7 2026 $ 539,136.00 8 2027 $ 1,080,000.00 9 2028 $ 1,728,000.00 10 2029 $ 3,456,000.00 Cost of Capital: 12% Includes Salvage Value WEEK 1 Your task is to analyze the above capital projects, and reach a capital decision based on (IRR, NPV, and Payback). In order to finance this project, the company has three options: Line of Credit Secured Loan Corporate Credit Card Which option should be selected and why? WIL PROJECT CASE STUDY ORIENTATION Deliverables, Format and Marking Scheme for This Week's Case Study Your task is: 2% Correct calculation of: NPV, IRR, and Payback. .1% Correct project selection. 2% Selecting the appropriate credit facility and justifying the selection. WEEK 1 Note: you can make any necessary assumptions to solve this case. Clearly state your assumptions in your submission