Reference no: EM131396364
Assignment
A quaint but well-established coffee shop, the Hot New Cafe, wants to build a new cafe for increased capacity. Expected sales are $800,000 for the first 5 years. Direct costs including labor and materials will be 50% of sales. Indirect costs are estimated at $100,000 a year. The cost of the building for the new cafe will be a total of $750,000, which will be depreciated straight line over the next 5 years. The firm's marginal tax rate is 37%, and its cost of capital is 12%.
For this assignment, you need to develop a capital budget. It is important to know what the cafe managers should consider within their capital budget. You must also define the key terms necessary to understand capital budgeting. In this assignment, please show all work, including formulae and calculations used to arrive at financial values. You must answer the following:
• Using the information in the assignment description:
o Prepare a capital budget for the Hot New Cafe with the net cash flows for this project over a 5-year period.
o Calculate the payback period (P/B) and the net present value (NPV) for the project.
o Answer the following questions based on your P/B and NPV calculations:
- Do you think the project should be accepted? Why?
- Define and describe Net Present Value (NPV) as it pertains to the new cafe.
- Define payback period. Assume the company has a P/B (payback) policy of not accepting projects with life of over 3 years. Do you think the project should be accepted? Why?
Your submitted assignment must include the following:
o A double-spaced, two page Word document that contains answers to the word questions.
o You must include a Microsoft Excel spreadsheet for your calculations.
o Either the Word document or the Excel spreadsheet must have all of your calculation values, your complete calculations, any formulae that you used, the sources you wish to cite, and your answers to the questions listed in the assignment guidelines.
|
Decomposing a system into subsystems reduces the complexity
: If cohesion is the guiding principle driving developers to decompose a system into small parts, which competing principle drives them to keep the total number of parts small?
|
|
Is the companies claim justified
: A skeptic with some skill as an electrician wired up sockets and timers and lighted 40 bulbs. The life of each bulb recorded automatically. Is the companies' claim justified?
|
|
Describe the most valuable lesson you learned from the case
: Outline the key issues and facts of the case. Critical Point - Highlight the compelling decision/factor that influenced the outcome. Lessons Learned - Describe the most valuable lesson you learned from the case.
|
|
Identify and define at least one control object
: Assuming the same file system as before, consider a scenario consisting of selecting a File on a floppy, dragging it to Folder and releasing the mouse. Identify and define at least one control object associated with this scenario.
|
|
Prepare a capital budget for the hot new cafe
: Prepare a capital budget for the Hot New Cafe with the net cash flows for this project over a 5-year period. Calculate the payback period (P/B) and the net present value (NPV) for the project.
|
|
Discuss gender-role development
: This Assignment addresses the following course outcomes: Discuss gender-role development. Evaluate the importance of identity formation to cognitive and social development in adolescence
|
|
Draw the corresponding class diagram
: From the sequence diagram Figure 2-34, draw the corresponding class diagram. Hint: Start with the participating objects in the sequence diagram.
|
|
How can reliability be determined
: One student in the class wondered whether the correlation coefficient was reliable; that is, would a nonzero correlation be found in other classes? How can reliability be determined without calculating an r on another class?
|
|
Develop an employee compensation and benefits package
: Develop an employee compensation and benefits package for this new position. Support your ideas for the compensation/benefits package.
|