Sheet1Total initial investment$100millionPeriod10yearsProject plan 1leasing of trucks (Estimations)Leasing costs$750,000expected returns$100,000Period9yearsPayback period = cost of the project/annual cash flowspayback period = 7.5yearsThe project would be worth undertaking since the payback period is 7.5 years while the project will take 9 years.NPVAssuming required rate of return = 10%Cash flows$100,000Initial investment$750,000NPV = ($174,097.62)The NPV of leasing truck project is negative thsu according to this techniques, it is not profitable to undertake such a project.Project plan 2Introduction of new trailer partsAssuming required rate of return = 10%Expected annual cash flows$850,000Initial costs$4,600,000NPV$622,882.04The project is worth undertakingPayback periodExpected annual cash flows$850,000Initial costs$4,600,000Period10yearsPayback period = 5.4117647059The project should be undertaken.Project plan 3Starting a new outletAssuming required rate of return = 10%Expected annual cash flows$7,780,000Initial costs$38,600,000NPV$9,204,732.08The project is worth undertakingPayback periodExpected annual cash flows$7,780,000Initial costs$38,600,000Period10yearsPayback period = 4.9614395887The project should be undertaken. Sheet2 Sheet3 Capital planning cycle Eugene Douglass Tiffany Simons Angeline Petion AIU Online 1 Introduction A capital plan analyze all the expected projects to be carried out by the UPC Company for a period of 10 years given the amount of $100 million is to be used for the projects. A workable plan should be developed in order to ensure the set budget is met and proper use of the funds. Any additional funds needed would be obtained from the sale of fleet of trucks. 2 Capacity condition and need assessment For proper implementation of the capital plan, the company management team should have a well drawn plan for each project extent and the conditions necessary for the project to be successful. Different projects require differing needs and thus the company should have a well established requirements for each project to be undertaken. This stage takes care of the various projects requirement in advance before the start of the capital plan. 3 … Having clear knowledge of the needs of each specific project makes easy for the projects to deliver as expected. It make available all the skilled man power for the expected projects and the resources. Project proposal discussions and management Capital plan project proposal entails giving the summary of the proposed projects to be carried out. UPC Company intends to maintain competitive in the market. The objectives of undertaking the projects would be to improve the company products and services provided. … Management is obligated to undertake project monitoring during the 10 year capital plan. The company capital structure is 30% debt and 70% equity, hence for future funding, the company may decide to issue its shares to the public or borrow. Capital .

1. Sheet1Total initial investment$100millionPeriod10yearsProject
plan 1leasing of trucks (Estimations)Leasing
costs$750,000expected returns$100,000Period9yearsPayback
period = cost of the project/annual cash flowspayback period =
7.5yearsThe project would be worth undertaking since the
payback period is 7.5 years while the project will take 9
years.NPVAssuming required rate of return = 10%Cash
flows$100,000Initial investment$750,000NPV =
($174,097.62)The NPV of leasing truck project is negative thsu
according to this techniques, it is not profitable to undertake
such a project.Project plan 2Introduction of new trailer
partsAssuming required rate of return = 10%Expected annual
cash flows$850,000Initial costs$4,600,000NPV$622,882.04The
project is worth undertakingPayback periodExpected annual
cash flows$850,000Initial
costs$4,600,000Period10yearsPayback period =
5.4117647059The project should be undertaken.Project plan
3Starting a new outletAssuming required rate of return =
10%Expected annual cash flows$7,780,000Initial
costs$38,600,000NPV$9,204,732.08The project is worth
undertakingPayback periodExpected annual cash
flows$7,780,000Initial costs$38,600,000Period10yearsPayback
period = 4.9614395887The project should be undertaken.
Sheet2
Sheet3
Capital planning cycle
Eugene Douglass
Tiffany Simons
Angeline Petion
AIU Online

2. 1
Introduction
A capital plan analyze all the expected projects to be carried out
by the UPC Company for a period of 10 years given the amount
of $100 million is to be used for the projects.
A workable plan should be developed in order to ensure the set
budget is met and proper use of the funds.
Any additional funds needed would be obtained from the sale of
fleet of trucks.
2
Capacity condition and need assessment
For proper implementation of the capital plan, the company
management team should have a well drawn plan for each
project extent and the conditions necessary for the project to be
successful.
Different projects require differing needs and thus the company
should have a well established requirements for each project to
be undertaken.
This stage takes care of the various projects requirement in
advance before the start of the capital plan.
3
…

3. Having clear knowledge of the needs of each specific project
makes easy for the projects to deliver as expected.
It make available all the skilled man power for the expected
projects and the resources.
Project proposal discussions and management
Capital plan project proposal entails giving the summary of the
proposed projects to be carried out.
UPC Company intends to maintain competitive in the market.
The objectives of undertaking the projects would be to improve
the company products and services provided.
…
Management is obligated to undertake project monitoring during
the 10 year capital plan.
The company capital structure is 30% debt and 70% equity,
hence for future funding, the company may decide to issue its
shares to the public or borrow.
Capital project submission
Budget estimates for the proposed capital project plan are
presented to the board for evaluation.
Management ensures the budget has taken care of all that would
be required to carry out the projects
Estimates made should be approved so as to avoid over or under
utilization of the available resources.
…
For external financing, the company should have well submitted
outline of the source of fund.
The effect of such borrowings should also be known in advance

4. and proper measures to mitigate the company from facing a
downfall put in place.
Financial analysis of the project
Financial analysis of the capital project would help in knowing
if the projects would be beneficial to the company or not.
Total costs involved by all the projects would be compared with
the total benefits of the same projects.
Using the capital budgeting techniques, it is possible to
determine if the projects would be profitable to the company or
not.
Conclusion
The purpose of the capital plan should be derived at the end of
the 10 year period, therefore all the stages involved in capital
planning cycle need to be integrated.
The achievement of every stage depend on the previous stage of
the cycle and therefore proper care should be implemented when
developing a capital plan.
Reference
Bizfillings. (2012, May 24). Bizfillings. Retrieved from
Financial analysis of major projects:
http://www.bizfilings.com/toolkit/sbg/finance/cash-flow/major-
project-financial-analysis.aspx
Investopedia. (2015). Investopedia. Retrieved from Complete
Guide To Corporate Finance:
http://www.investopedia.com/walkthrough/corporate-
finance/4/project-analysis/break-even.aspx
Sherman, A. J. (2005). Raising capital: Get the money you need
to grow your business. New York: AMACOM.

5. Running Head: CAPITAL PLANNING CYCLE
1
CAPITAL PLANNING CYCLE
6
Capital Planning Cycle
Eugene Douglass
Tiffany Simons
Angeline Petion
AIU Online
The capital planning cycle is a multi-year plan on the use
of finance in a company that lists the proposed capital projects
elaborating on how they would occur and give detailed
explanations of each and every project. The capital plan allows
evaluation of the projects; enable the company to consolidate

6. projects to reduce costs of borrowing and thus stabilize debts,
and also this program fosters cooperation between various
departments of the company. The different stages of capital
planning cycle include:
Capacity condition evaluation and needs assessment
Capacity condition and needs assessment is a stage whereby the
company management ensures that all the requirements for the
proposed plans are available and in good condition. The
company should make preparation on how necessary materials
would be delivered once the plan is in progress and set strict
(Sherman, 2005). The assessment of the projects needs helps in
bridging the gap between what is required currently and what
the projects would demand once their implementation begins.
Need assessment help in clarifying the problems and providing
appropriate solutions to identified problems before the plans are
put in place. With quality capacity condition and need
assessment, the capital plan has higher chances of better
performance and achievement of desired goals. The sources of
funds are laid down at this stage where the company analyzes
the various options available that are less costly and select the
most appropriate and that which is less risky.
Project proposal discussions and management
At this stage, the various projects that are to be undertaken in
the capital plan are to be summarized so as to give clear
intentions for the $100 million funding to be used. Universal
Parts Company is a well-established company with strong
market niche and the competition it faces from its rival does not
significantly affect the company sales since it has laid down
measures to remain competitive in the market. Capital plans
would aid in improving the services of the company through
service match hence there is a need to bring the projects into
play so that the company would improve personal service
(Sherman, 2005).
The objectives behind undertaking this capital plan for different
projects aims at improving the products of UPC Company and
take measures to introduce new ones to the market. Also, the

7. company services would be developed and mainly the after sales
services. With these objectives in mind, the company would be
in a position to remain competitive in the market and provide
quality services and products. The management would carry out
its function in ensuring the projects are monitored through on-
going monitoring of these projects at every stage to determine if
the set objectives are achieved. In case of future funding, the
company may issue more of its equity shares or depending on
the level of debt of the company, it can acquire loans from
lending institutions.
Capital project submission
The submission stage of the capital planning cycle entails
providing a detailed approved budget based on the different
projects to be carried out during the capital plan period
stipulated. The management committee will carry out the budget
review to approve and determines those projects that have
priority over others based on the funds. In a situation where a
project requires external financing other than the $100 million
invested initially, the board of management will develop a
submission to that effect stating the source of finding. Clear
elaboration of the availability of the source of funding need to
be provided and the effect it would probably have on the
operations of the company for the period the company would be
paying the debt. After the submissions are made by the board,
the committee responsible releases the funds required to
undertake those projects that were ready to begin. An agreement
is arrived at between the issuing department and the department
or committee mandated with the task of ensuring the funds are
utilized appropriately, where both teams sign the agreement.
The budget committee would then carry out regular reviews of
the progress of the capital project and offer advice where
necessary.
Financial analysis of the project
This stage involves evaluation of the expected returns from the
proposed projects that can be determined by the creation of the
various scenarios that are expected to occur and to match them

8. with their probability of occurrence. Historical performance of
such projects undertaken in the past would help in providing
more information concerning investment variability and in
knowing the risks involved with such projects. To determine the
future outcome of the capital projects, an extreme estimate, and
the least possible outcomes are estimated (Investopedia, 2015).
The initial investment of $100 million if acquired from debt
financing, the capital structure of the company would change
and also if acquired through the issue of shares, the proportion
of equity would increase.
The main reason behind UPC decision to undertake the capital
project plan would be to generate revenue and maintain its
market niche in the market as well as improving the existing
services and products it offers. Therefore, the company needs
assurance that the costs involved in undertaking those projects
would not outweigh the benefits it would derive from them. A
detailed analysis should be carried out where all the costs to be
involved are taken into consideration and compared to the
expected returns from the same projects (Bizfillings, 2012).
Expected revenue for a good project should be higher than the
expected costs to be involved.
In this regard of the capital plan, various capital budgeting
techniques would be put to use to determine if the projects
would be viable undertaking or they would not bring any
revenue to the company. Such budgeting techniques include net
present value, payback period and accounting rate of return. The
analysis would be for only some of the proposed project and is
completed on the excel sheet.

9. Reference
Bizfillings. (2012, May 24). Bizfillings. Retrieved from
Financial analysis of major projects:
http://www.bizfilings.com/toolkit/sbg/finance/cash-flow/major-
project-financial-analysis.aspx
Investopedia. (2015). Investopedia. Retrieved from Complete
Guide To Corporate Finance:
http://www.investopedia.com/walkthrough/corporate-
finance/4/project-analysis/break-even.aspx
Sherman, A. J. (2005). Raising capital: Get the money you need
to grow your business. New York: AMACOM.