Company: L.S. Starrett
Overview: The final project for this course is the creation of an external capital funding proposal.
Most businesses face a landscape of uncertainty and a never-ending stream of risks and opportunities. Managers must continually project the likely financial
impact of decisions, make recommendations, act on those decisions, determine how to pay for them, and evaluate the costs and effectiveness of what has been
done. Many decisions are short-term, routine, and operational. Others are longer-term investment decisions that require substantial new resources, such as
developing new services, expanding into new geographic markets, or undertaking business combinations or spin-offs. Each requires managers to forecast, plan,
and make decisions based on a thorough understanding of both internal and external factors that can affect a company’s financial success.
For the summative assessment in this course, you will bring your finance and economics knowledge to bear by preparing an external capital funding proposal for
a major international investment at a publicly traded corporation. In order to secure the support of potential financial backers, your proposal will need to lay out
what the proposed investment opportunity is, how it fits within the company’s broader mission and goals, its financial impact, and the amount being requested
and why (including alternative funding mechanisms considered). In addition, it will also need to include information on the organization’s context, risk factors,
and microeconomic assumptions that could affect the success of the investment.
Prompt:
Submit a short paper that addresses Section III, Part C; Section V; and Section VI of the final project.
Specifically, the following critical elements must be addressed:
III. Justification:
C. Financial impact. This section should discuss the project’s most likely financial implications and the consolidated financial projection with and without
the project. Be sure to:
1. Project the incremental, annual, and cumulative cash benefits and outflows associated with the proposed expansion for the next seven to
10 years, using a spreadsheet or other relevant presentation vehicle to support your narrative. Be sure to justify your assumptions and
methodology based on sound microeconomic and financial principles. For example, what assumptions have you made about demand, price,
volume, capital purchase costs, incremental hiring, and so on?
2. Develop a consolidated financial projection of revenue, pretax income, and cash flow for the overall business, over that same number of
years, both with and without the proposed investment. Use a spreadsheet or other relevant presentation vehicle to support your narrative,
being sure to describe any relevant assumptions.
