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Assignment #1 – Project Management Cost & Budget Planning Assignment Objective: Demonstrate understanding of Modules 1 to 3 by building a solid financial business case for a business expansion. Focus on presenting and explaining the financial information to gain approval of the business case. Note: Assume the reader does not understand any of the terms you are going to

Assignment #1 – Project Management Cost & Budget Planning

Assignment Objective:

Demonstrate understanding of Modules 1 to 3 by building a solid financial business case for a business expansion. Focus on presenting and explaining the financial information to gain approval of the business case. Note: Assume the reader does not understand any of the terms you are going to use to build your business case. For example, the expected return on investment is 20% which means the initial investment plus an extra 20%.

Background:

Help build a solid business case for Cindy Lou’s (existing candy shop) to launch the first ever lemonade truck in Whoville. Cindy Lou’s has been selling eight flavours of lemonade in their candy shop for the past 12 months and it has been a huge success.

Solutions considered:

  1. Do nothing
  2. Launch a permanent lemonade cart outside Whoville Candy Factory
  3. Launch a mobile lemonade truck(recommended)

Cindy Lou’s mobile lemonade truck will sell all eight flavours. All lemonades are the same size. All flavours sell for $7 and cost $3.00 (Total fixed and variable costs). Assume an average of 250 lemonade truck customers are served per day and the truck operates 300 days per year.

A fantastic mobile food truck is for sale on Whoville Marketplace for $40,000. The truck is expected to be worth $5000 in five years. Operating and maintenance costs are expected to be $300 per month. $2000 will likely be spent on permits, licenses, and legal compliance per year. Two drink dispensing machines need to be purchased. Existing point of sale (POS) mobile app will be used for the mobile food truck (no additional fees). Loans are available at 3.75% from Whoville Fun-ding. All marketing will be done using social media and in the candy shop.

Any other financial information must be researched and explained in the business case.

Assumptions:

  • All non-financial analysis (market analysis…) has been done and is favourable
  • The candy shop will be responsible for ordering supplies,etc using existing vendors and processes.
  • Food and beverage trucks make an average of 7.7% in profit per year

Assignment Requirements:

  • Executive summary: Brief overview of the contents of your business case to encourage the reader to find out more information.
  • Opportunity:
    • Quick overview of the opportunity. No more than a few sentences to a paragraph in length
  • Recommended solution:
    • Provide a brief overview of the solutions considered and explain why the recommended solution is the best option
  • Financial information:
    • Thoroughly outline the projected financial costs for the recommended solution, and then weigh them against the benefits. Demonstrate the recommended solution is worth the budget required. Use the information from Modules 1 to 3 to build a solid business case. Demonstrate your understanding of the course materials by explaining the financial information you are presenting in a concise manner.
      • Financial overview:
        • Budget
        • Revenue
        • Expenses
        • Hurdle rate
        • Net Present Value
        • Return on Investment
        • Payback Period
        • Pricing structure (same as the candy shop)
        • Financial ratios
        • Elasticity
        • Proposed funding source(s), terms, etc…
        • Cost benefit analysis
        • Key financial statement information such as existing cash flows
  • Conclusion:
    • Write a persuasive conclusion emphasizing the benefits of the opportunity and request approval of the business case
  • Appendix:
    • Business case financials spreadsheet (file attached)
    • Life cycle costing for the truck
    • List of expenses broken down by category (labour, vehicle expenses, inventory…)
    • Sales forecast calculation
    • Other calculations and / or analysis

Formatting:

  • Use graphics (minimum 3) to organize information and create visual appeal
  • Adhere to APA standards
  • Write in third person
  • Submit as one PDF
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