[Recommended]Course Project Overview wk 5

Course Project Overview wk 5 Wireless World WIRELESS WORLD Budget Proposal For 5 years BUSN278 Summer Professor Alan Hansen DeVry University Table of Contents Section…

Course Project Overview wk 5
Wireless World
Budget Proposal
5 years
Professor Alan Hansen
DeVry University
Table of Contents
Page Number
Executive Summary
Sales Forecast
Sales Forecast
Methods and Assumptions
Capital Expenditure Budget
Investment Analysis
Cash Flows
NPV Analysis
Rate of Return Calculations
Payback Period Calculations
Pro Forma Financial Statements
Pro Forma Income Statement
Pro Forma Balance Sheet
Pro Forma Cash Budget
Works Cited
Appendix 1: [description]
Appendix 2: [description]
(Please put page numbers in the last column of the table of contents above, because they apply to your finished assignment. Do this after your project is complete. Remove this text and all text that is in italics in this template when finished with your project.)
(Also, please submit your Excel spreadsheet that shows your supporting calculations.)
1.0 Executive Summary
The business selected for startup is Wireless World – Wireless Device Retail store, only of the most high tech of its type in the region. The business will be offering a wide range of unique wireless products, which are rare and are consumer focused, as the technology and the performance delivered by these devices is the ultimate reason a class of customers are attracted toward the stores which are dealing in such products. The business will be mainly operating through flagship stores in the big shopping malls, where such customer traffic is attracted to these products.
As the business will be in startup phase the budget will help the business is achieving the profitability as well help in analyzing the sales and cash flow volume, as that will support the planning of cash flows of business.
The budget will be mainly consistent of the initial investment the business owner will be required to place, the NPV projections states that the business will be able to be valued at $xxx, along with handsome payback period, and IRR.
2.0 Sales Forecast
Briefly introduce the sales forecast section.
2.1 Sales Forecast
The 5 years sales plan is mentioned below which mainly includes the business growth in sales, consistently throughout the 5 years, this comprise 5% straight growth throughout, and a price inflation adjustment of 2% each year, assuming the product demand would remain steady.
The main assumption behind the fact that product demand would remain steady is that the manufacturing businesses bring on a new product each year and they attract a specific customer base, that customer base would keep on increasing every year.
Moreover, there would be another revenue stream which is servicing of the sold / similar products, which is assumed that there would be 15% of sales volume each year which would be serviced, that could be company customer or walk in customer. The servicing price would also increase as per inflation adjustment.
The sales volume and servicing volume along with prices is assumed to be on average basis throughout the year.
2.2 Methods and Assumptions
The sales forecast is mainly based over the following assumptions, and the detailed working is annexed below.
1. There would be a standard increase in sales volume each year by 5%.
2. There would be a standard price inflation adjustment each year by 2%.
3. Each year there would be 15% of the sales volume, in servicing cliental, this can be company customer or walk in customer.
4. The sales, servicing, and prices are assumed on average basis throughout the year, keeping in sight the specific products demand.
5. Sales is assumed to remain in growth for all 5 years, as these are the unique products, having loyal customers base, which would keep on increasing.
3.0 Capital Expenditure Budget
There are number of assumptions involved while calculating the capital expenditure incurred, which is necessary for business before it begins the operations, to generate revenue.
The most important assumptions are enlisted below:
1. Assuming the filling fees is constant, and all the optional certificates will be opted as well.
2. There would not be any business insurance until the business commence operations.
3. No employee would be hired until the business starts operations.
4. Advertisement, rent and utilities expenses will be incurred, as these are initial investments.
5. The business loan will be charged at 3.50%.
4.0 Investment Analysis
The business proposal of wireless world, seems to be a real star idea of the business startup, as this business is dealing with unique products and the unique customers, keeping the discount factor of 12%, the business projection has reported a huge NPV, IRR, and payback, which reflects that the business is highly recommended to be proceeded with, to ensure the business proposal is worthy, all the necessary assumptions are made, and the necessary costs related to start up are accounted for in below 3 sub heads.
4.1 Cash flows
The above prepared is the total cash flow model the business is predicted to have over the period of 5 years, the main substance here is to notice the loan from owner, which is spread over the 10 years business term, and there is continuous growth in prices, sales, and expenses for the upcoming 5 years.
4.2 NPV Analysis
The NPV reflects business proposal will be generating enough profits, if evaluated in today date, that the business is worth to be started or not, and the NPV is deeply positive, which states that the project should be taken.
4.3 Rate of Return
The IRR calculated for the project is 262%, which reflects that the return has to be below 262%, otherwise the project NPV will become zero.
4.4 Payback Period
The payback period calculation, reflects that as the business is having deep cash flows, if would only take first few operational month of the business, to recover the initial investment, as the inflow of customers and sales volume is expected to be higher, the payback period of the business is 0.38 months.
5.0 Pro forma Financial Statements
Briefly introduce this section here.
5.1 Pro Forma Income Statement
Describe key figures and assumptions from the income statement, such as important profit or sales figures and their causes. Also, provide a screenshot of your pro forma income statement.
5.2 Pro Forma Balance Sheets
Provide a screenshot of your balance sheets and describe key figures they contain.
5.3 Pro Forma Cash Budget Provide a screenshot of the cash budget and describe the impact of the budget on cash balances.
6.0 Works Cited
List any sources you cited in the body of your report.
7.0 Appendices
NOTE: Start this section at the top of a new page.
This section of the budget proposal is where you’ll attach all of the supporting materials that you’ve referenced in the preparation of your plan and that is too detailed or extensive to be included in the body of the report. Use this page to separate the appendices from the text in the body of your report. Make certain that you update the table of contents to include the title of each exhibit in the appendix and its page number.
7.1 Appendix 1: [put a description here]
7.2 Appendix 1: [put a description here]
7.3 Appendix 1: [put a description here]
Filling Fees160
Initial Inventory20,000
Total Cost52,160
Initial Investment from owner52,160
Interest payable @ 3.50%53,986
DescriptionYear 0Year 1Year 2Year 3Year 4Year 5
Sales – Products- 500,000.00 535,500.00 573,520.50 614,240.46 657,851.53
Sales – Services- 7,500.00 8,032.50 8,602.81 9,213.61 9,867.77
Filling Fees160.00 – – – – –
Renovation25,000.00 – – – – –
Rent5,000.00 5,250.00 5,512.50 5,788.13 6,077.53 6,381.41
Advertisement1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
Business Insurance- 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
Utilities1,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
Salary – Manager & Asst. Manager- 1,750.00 1,925.00 2,117.50 2,329.25 2,562.18
Salaries – Employees- 3,500.00 3,850.00 4,235.00 4,658.50 5,124.35
Health and other benefits- 350.00 385.00 423.50 465.85 512.44
Credit card company share- 12,687.50 13,588.31 14,553.08 15,586.35 16,692.98
Inventory Requirements20,000.00 – – – – –
Total Cost52,160.00 8,250.00 8,512.50 8,788.13 9,077.53 9,381.41
Initial Investment from owner52,160.00 – – – – –
Interest payable @ 3.50%- 5,398.50 5,398.50 5,398.50 5,398.50 5,398.50
Cash flows(156,480.00) 466,314.00 500,360.69 536,819.47 575,860.55 617,666.04
Cash inflow
Cash outflow
DescriptionYear 0Year 1Year 2Year 3Year 4Year 5
Cash flows(156,480.00) 466,314.00 500,360.69 536,819.47 575,860.55 617,666.04
Discount Factor @ 12%10.8930.7970.7120.6360.567
PV of Cash flows(156,480.00) 416,418.40 398,787.47 382,215.47 366,247.31 350,216.65
NPV =1,757,405.29
Year 1Year 2Year 3Year 4Year 5
Sales – Products500,000 535,500 573,521 614,240 657,852
Sales – Services7,500 8,033 8,603 9,214 9,868
Products – VolumeYear 1Year 2Year 3Year 4Year 5
Sales – units500.00 525.00 551.25 578.81 607.75
Avg. Price / unit1,000.00 1,020.00 1,040.40 1,061.21 1,082.43
Services – VolumeYear 1Year 2Year 3Year 4Year 5
Service units75.00 78.75 82.69 86.82 91.16
Avg. Price / Service100.00 102.00 104.04 106.12 108.24
Sales – ( $ )Year 1Year 2Year 3Year 4Year 5
Sales – Product ( $ )500,000 535,500 573,521 614,240 657,852
Sales – Services ( $ )7,500 8,033 8,603 9,214 9,868

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