Capital Budgeting Analysis Project
A Deep Dive into Futura Tech's Expansion Prospects intermediate
With Ivan Kitov
Type: Course project
Duration: 5 Hours
Case Description
In the Capital Budgeting Analysis project, you will take on the role of a Senior Financial Analyst at Futura Tech Inc., a U.S.-based company specializing in AI-powered drones. The company is considering a strategic expansion by investing in a new manufacturing facility in Singapore.
Your role is to conduct a comprehensive capital budgeting analysis to determine whether this expansion is financially viable. You will assess the project’s expected cash flows, cost of capital, and potential return on investment using key financial techniques.
To complete this analysis, you will work with financial projections, investment drivers, and cost structures while applying real-world corporate finance methodologies. Your findings will help Futura Tech’s leadership make an informed decision on whether to move forward with the expansion.
Project requirements
Project files
The Futura Tech Inc. project file provides all the key financial inputs required to evaluate the feasibility of a proposed factory expansion. Your analysis will focus on the 'Factory Project Drivers' sheet, which includes the data necessary to carry out a comprehensive capital budgeting assessment.
What’s Inside the Sheet:
- Initial Investment Outlay – Total upfront capital required to launch the project.
- Sales Forecast – Projected revenue growth rates over a 10-year investment horizon.
- Project Financing – Breakdown of debt and equity contributions used to fund the project.
- Cost of Capital Inputs – Data needed to calculate the project’s Weighted Average Cost of Capital (WACC), including market assumptions and comparable company metrics.
- Operating & Capital Expenditures – Details on fixed and variable costs, depreciation method, tax rate, and the residual value of the project.
- Working Capital Assumptions – Days sales outstanding (DSO), days inventory outstanding (DIO), and days payable outstanding (DPO), necessary for modeling annual cash flow needs.
Use the 'Factory Project Drivers' sheet in the 'Futura Tech.xlsx' file to complete your analysis.
- 1 Project file
- Guided and unguided instructions
- Part 1: Sales Forecast & Fixed Asset Rollforward
- Part 2: Working Capital & Financing Structure
- Part 3: Profit & Loss (P&L) Statement & Operating Cash Flow
- Part 4: Capital Budgeting Analysis & Final Recommendation
- Quiz
