1 Determine the cost of Debt (required return on Debt).

2.Determine the cost of equity (required return on equity). Note: you do not have dividends nor shares as we are not dealing with a company. Can you solve this problem by using an appropriate proxy?

3.Combine the various elements of the cost of capital above and calculate the weighted average cost of capital for the firm

4. Determine the optimal order size and inventory holding for each type of bike frame

5. Calculate an efficient safety stock level for both Carbon and Steel frames. Base expected sales on last years figures. Assume the weekly sales of both bike frames follow a normal distribution, and that there is no variation in the lead time. Murray is aiming at a 95% service level for both frame types

6. Compare current inventory holding with optimal calculated above

7. Determine current debtors turnover and compare with planned level.

8. Calculate a recommended percentage discount rate to be applied in order to prompt cash sales. This discount would lead to earlier realisation of cash without exceeding the current cost of credit sales

9. If required suggest relevant changes to working capital, explain how your suggested changes will assist to alleviate cash flow problems

10.Determine the Net Present Value  of the projected cashflows related to the online sales project, and advise  whether he should proceed

11. Determine the relevant cash flows for the capital budgeting decision (Bike repair and servicing project).

12. Evaluate the capital budgeting decision (Expansion of bike servicing facility) and comment on whether the project should proceed.

13. Determine the relevant cash flows associated with a lease evaluation.

14. Evaluate the lease and comment (in report) on whether they should lease the asset or borrow and buy.

15. Complete the lease schedule

16. Complete a pro forma Balance Sheet. What would this statement look like if your recommendations were implemented.

17. Make any necessary assumptions where required. Ensure that you clearly stipulate what these are in your report.

18. Provide a report to Murray pointing out your recommendations (based on the workings) be sure to point out how specifically the recommendations would alleviate his problems

19. Include all calculations, charts, workings, assumptions used to come to your recommendations above in an appendix to your report

20. In addition you must complete a SWOT matrix outlining in bullet point format the Strengths, Weaknesses, Opportunities, and Threats associated with the existing bike frame manufacturing project and include this as an appendix to your report. See this link for assistance with a SWOT matrix.

21. Ensure you use appropriate referencing where required.

22. All files; The business report, along with spread sheet file containing calculations, minutes of team meetings and team log must be submitted via Blackboard in the "Assignment Tasks" "Holistic Assignment (Drop Box)" The same folder from which you extracted these documents.

23. The report is completed on time

Please Note that you will be asked to recreate any part of this assignment at a prearranged time reasonably convenient to both the candidate and the facilitator preferably during class time, but not limited to in class. On an individual basis the candidate will be required to successfully demonstrate how a specific outcome was derived. This will be a requirement for determination of competency. Therefore although the assignment is to be completed in teams of two, team members must be knowledgeable of and familiar with ALL aspects of the assignment. If a candidate is unable to replicate parts of the assignment, competency will not be awarded.