DeVry University Course Project BUSN278 Budgeting and Forecasting Student Project Activity – Week 4 A. Week 4: Section 4.0 Investment Analysis B. TCOs Addressed: TCO 6: Given one or more proposed investment projects and their estimated cash inflows and outflows and qualitative factors, evaluate the investment(s) and recommend the feasibility of a project or the most attractive of several projects. TCO 10: Given a description of a new business, new product, service or project develop, present and defend the budget. C. Project Activity Overview – Scenario / Summary: Use the Budget Proposal Workbook.xlsx and Budget Proposal Template.docx to develop and present an Investment Analysis for your new business startup. D. Deliverables: Complete Section 4.0: Investment Analysis. Also, provide calculations in MS Excel template tab 4.0 in the Budget Proposal Workbook.xlsx. Add section 4.0 to the Budget Proposal Template.docx and save it as YourName_Project_WK4.docx. Also add Section 4.0 to your Budget Proposal Workbook.xls and save it as YourName_Worksheet_WK4.xlsx and upload both files to the Week 4 Project Dropbox. E. Project Tasks: Task 1: Complete Section 4.0 of the Budget Proposal Workbook.xls and the Budget Proposal Template.docx. Task 2: Save the Excel and Word documents, and submit them to the Week 4 Project Dropbox. F. Grading Criteria Description Suggested Points The cash flows show detailed inflows and outflows, as well as net cash flows. 3 The NPV Analysis is properly calculated and presented. 3 The Rate of Return calculations are properly calculated and presented. 2 The payback period is properly calculated and presented. 2 Total Points 10 points End of Week 4 Copyright ®© 2010 by DeVry Educational Development Corporation. All rights reserved. No part of this work may be reproduced or used in any form or by any means – graphic, electronic, or mechanical, including photocopying, recording, Web distribution or information storage and retrieval systems – without the prior consent of DeVry Educational Development Corporation. Page 2 of 2 BUSN278_Project_Activity_ Week_4.doc Sheet1BUSN 278 Budgeting and ForecastingInstructor: Walter A. Corrigan, MBA, CMA, CFMWeek 4 CapEx Investment Metrics WorksheetThis CapEx investment metrics worksheet can be used to make an initial evaluation of a capital expenditures project, using some simplifying assumptions. It will allow the analyst to calculate investment metrics. In a real world situation this work would be followed up with more extensive analysis. This worksheet uses a five year planning horizon. In capital budgeting analysis it is assumed that on paper, the investment will be sold at the end of the planning horizon, and that positive cash flows will be recovered from the disposal of the working capital and fixed assets. Students should enter data in the blue cells. The orange cells have formulas and should not need to be edited. Project with uneven cash.

1. DeVry University
Course Project
BUSN278 Budgeting and Forecasting
Student Project Activity – Week 4
A. Week 4: Section 4.0 Investment Analysis
B. TCOs Addressed:
TCO 6: Given one or more proposed investment projects and
their estimated cash inflows and outflows and qualitative
factors, evaluate the investment(s) and recommend the
feasibility of a project or the most attractive of several projects.
TCO 10: Given a description of a new business, new product,
service or project develop, present and defend the budget.
C. Project Activity Overview – Scenario / Summary:
Use the Budget Proposal Workbook.xlsx and Budget Proposal
Template.docx to develop and present an Investment Analysis
for your new business startup.
D. Deliverables:
Complete Section 4.0: Investment Analysis. Also, provide
calculations in MS Excel template tab 4.0 in the Budget
Proposal Workbook.xlsx.
Add section 4.0 to the Budget Proposal Template.docx and save

2. it as YourName_Project_WK4.docx. Also add Section 4.0 to
your Budget Proposal Workbook.xls and save it as
YourName_Worksheet_WK4.xlsx and upload both files to
the Week 4 Project Dropbox.
E. Project Tasks:
Task 1:
Complete Section 4.0 of the Budget Proposal Workbook.xls and
the Budget Proposal Template.docx.
Task 2:
Save the Excel and Word documents, and submit them to the
Week 4 Project Dropbox.
F. Grading Criteria
Description
Suggested Points
The cash flows show detailed inflows and outflows, as well as
net cash flows.
3
The NPV Analysis is properly calculated and presented.
3
The Rate of Return calculations are properly calculated and
presented.
2
The payback period is properly calculated and presented.
2

3. Total Points
10 points
End of Week 4
Copyright ®© 2010 by DeVry Educational Development
Corporation.
All rights reserved. No part of this work may be reproduced or
used in any form or by any means – graphic, electronic, or
mechanical, including photocopying, recording, Web
distribution or information storage and retrieval systems –
without the prior consent of DeVry Educational Development
Corporation.
Page 2 of 2
BUSN278_Project_Activity_ Week_4.doc
Sheet1BUSN 278 Budgeting and ForecastingInstructor: Walter
A. Corrigan, MBA, CMA, CFMWeek 4 CapEx Investment
Metrics WorksheetThis CapEx investment metrics worksheet
can be used to make an initial evaluation of a capital
expenditures project, using some simplifying assumptions. It
will allow the analyst to calculate investment metrics. In a real
world situation this work would be followed up with more
extensive analysis. This worksheet uses a five year planning
horizon. In capital budgeting analysis it is assumed that on
paper, the investment will be sold at the end of the planning
horizon, and that positive cash flows will be recovered from the
disposal of the working capital and fixed assets. Students
should enter data in the blue cells. The orange cells have
formulas and should not need to be edited. Project with uneven
cash flowsYearMetric012345ARR accounting rate of
returnEnter total annual sales years 1 to 5 from for your course
project company's Week 2 Five Year Sales ForecastCalculate

4. net operating cash flows years 1 to 5 (assume = 35%
sales).35.0%Enter straight line annual depreciation years 1 to 5
= (initial investment - salvage value)/5. See cells C20 and H21.
Enter the amount of the annual depreciation expense as a
positive $ amount. Annual accounting income/(loss) years 1 to 5
= net operating cash flow on row 12 minus annual depreciation
on row 13.-----Compute ARR = average accounting income for
years 1 to 5 which is the sum of accounting income (D14 to
H14)/5, divided by the initial investment in C20 (with no minus
sign).NPV net present valueProject interest rate (assume =
8%)8.0%Enter net operating cash flows from line 12 above-----
Enter initial investment in year 0 (a cash outflow is a negative
amount).Add cash inflow (positive amount) from receipt of
salvage value (aka FMV fair market value) in year 5 (assume =
20% of initial investment in C20)20.0%Net operating and
investing cash flows years 0 to 5------PV $1 factor using project
discount rate. The PV factors were calculated using the formula
for PV $1, but a present value $1 table posted in Doc Sharing
could be consulted instead using the project interest rate in
B18.1.00000.92590.85730.79380.73500.6806Calculate each
column's PV cash flows (row 22 x row 23).Compute NPV $
years 0 to 5 which = the sum of the PV cash flows on row 24
from C24 to H24IRR Internal rate of returnIRR Internal rate of
return %: Use Excel formula =IRR (type =IRR in B28) and
enter the range of cash flows for years 0 to 5 from C22 to H22.
Using =IRR, the values can be entered as an array C22:H22 by
dragging your cursor over those cells. PI Profitability
IndexDivide the sum of the PV cash flows for years 1 to 5 from
D24 to H24, by the PV cash flow in year 0 in C24 (without a
negative sign).PaybackPayback table >>>YrInvestmentAnn
CFCumulative CFEnter initial investment from year 0 shown in
C20 (cash outflow is negative) in cell D35.0- 0Enter the net
cash flows for years 1 to 5 from D22 to H22 in cells E36 to
E40.1- 0Payback is achieved when cumulative cash flow is $02-
03- 04- 05- 0Payback is achieved in which year (include a
decimal such as 3.3 years or 3.5 years)

5. Author: Author:
Payback is achieved in the year when cumulative cash flow is
$0 or positive. The initial investment is a minus amount, and
the annual cash flow for years 1, 2, etc should be positive.
Please see the payback calculation example in the Week 4
online lesson.
Year 1 cumulative cash flow = the initial investment (minus) +
year 1 annual cash flow. Year 2 cumulative cash flow = year 1
cumulative cash flow + year 2 annual cash flow.
It is usually shown as year + decimal. For example, if
cumulative cash flow goes positive sometime during year 3,
then payback will be in 2.3 or 2.6 etc years.
&F &P &D
Sheet2
Sheet3
week3/Project_WK3.docx.docx
Papa Geo’s Restaurant
Papa Geo’s Restaurant
Budget Proposal
for
2017-2021
BUSN-278
Professor Walter Corrigan

6. DeVry University
Table of Contents
Section
Title
Subsection
Title
Page Number
1.0
Executive Summary
2.0
Sales Forecast
2.1
Sales Forecast
2.2
Methods and Assumptions
3.0
Capital Expenditure Budget

7. 4.0
Investment Analysis
4.1
Cash Flows
4.2
NPV Analysis
4.3
Rate of Return Calculations
4.4
Payback Period Calculations
5.0
Pro Forma Financial Statements
5.1
Pro Forma Income Statement

8. 5.2
Pro Forma Balance Sheet
5.3
Pro Forma Cash Budget
6.0
Works Cited
7.0
Appendices
7.1
Appendix 1: [description]
7.2Appendix 2:
[description]
1.0 Executive Summary

9. This is a budget proposal for a startup restaurant business. The
business will be operated out of a single location and will offer
Italian food consisting of pizza, pasta, meats and fish dishes.
The business will be named Papa Geo’s restaurant which will be
located in Orlando Florida. The target market for this business
is the middle and lower class families with children as well as
seniors seeking good Italian style food at value based pricing.
The location of the restaurant and the delicacies offered makes
it a perfect place for family dining and parties. The restaurant
will provide its services in form of buffet which will be formed
by pizza, pasta, salad bar, and soda. Additionally, the restaurant
will also have a gaming area and banquet hall that fits the needs
of children and adults. Papa Geo’s restaurant will also be
providing fresh food at value prices. The population of the place
where the restaurant is located gives it a chance to grow at a
fast rate thus obtaining maximum profits.
Pap Geo’s will be a single Italian restaurant that will start and
operate with a goal of generating an income of $40,000 at every
month that will include a sale profit of 12%. The restaurant
expects to have achieved its goal after a period of two years
after it starts operating. Because the restaurant will be an Italian
one, it will serve Italian foods of all types such as pizza, several
types of pastas that will have six types of sauces, six types of
pasta, pasta specialties, soup, desserts, and a self-serve soda
bar. A gaming area for children will also be part of the services
offered by the restaurant. This will help target middle and lower
middle class families with children looking for entertainment as
well as good food. This is why we have selected the current
location, because it has many families that are of middle class
spending habits and have children. There is also has no direct
competition in the area and along with the middle class
population growing at a rate of 6% per year the business has a
strong opportunity of successfully growing in the fast casual
food market. The restaurant has good Italian food that is pocket
friendly to every one of the target market and this should help

10. to ensure that our target customers keep coming back to the
restaurant.
The business will first focus on the registration of the company
as a limited liability company as per the filing regulations of
the Florida Secretary of State that also determines the fee
charges. Other budget costs will include;
Renovation of facility expected - $15,000
Insurance - $1000 annually
Health and employees benefits – 20% of manager’s and
assistant manager’s salaries
`There other costs that will be estimated especially through
research, for example the regular delivery of various materials
such as cooking ingredients, gaming machines, employee
payrolls, advertising costs, cutlery and service materials, and
delivery of soft drinks.
The cash budget to start the budget will come from own
personal fund but will also be granted some loan for the purpose
of initial start-up repayable within a period of 10years under the
current interest rates. Credit cards will be utilized on a daily
basis with 30 days of trade credit from the suppliers.
2.0 Sales Forecast
It is anticipated that the business will do well in terms of
sales in the next five financial years. The restaurant targets to
have 500,000 dollars in the fifth financial year which will be a

11. great achievement for the company. This big step can be
attributed to the fact that the company will be using some of the
best marketing strategies that are available. In addition, we
expect that customer loyalty will grow as we deliver the product
and service at a quality price.
2.1 Sales Forecast
During the second financial year, the sales are expected to rise
by about 50% due to the effective marketing strategies that will
be used. The marketing department will work day and night and
this will cause increasing sales since more people will get to
know about the dining experience we offer. In the third year,
word of mouth should be at its peak bringing more and more
customers to the restaurant. The last two years should show a
relatively low change in sales since the business will now be
operating at its optimal point resulting fewer new customers.
Also, the notable increase in sales in subsequent years can be
attributed to top quality services offered at the restaurant which
means that customers will be able to come back and enjoy the
services offered. This, as well as minor improvements that will
continue to enhance the customer experience.
Year 1
Year 2
Year 3
Year 4
Year 5
Sales
100000
150000
250000
400000
500000
2.2 Methods and Assumptions

12. The above mentioned figures have being arrived at after some
calculations as illustrated below
Year one 100000 dollars in sales
It is assumed that the percentage increase in sales for the first
one year will be 50%
Thus (150/100)*100000
=150000 this is the year 2 sales
Year two sales 150000 dollars
Assumed that there is 66.67% increase in sales
(166.67/100)*150000
= 250000 this is the year 3 sales
Year three sales 250000
Percentage increase in sale 60%
(160/100)*250000
400000 sales in year four
Year four sales 400000
Anticipated percentage increase in sale 25%
(125/100)*400000
500000 sales in year five
Year five sales 500000
3.0 Capital Expenditure Budget
Capital Expenditure Budget:
Item
Cost
Quantity
Total cost
Source
Registering a business
200
1
200
ehow.com
Renovation of facility

13. 18000
1
18000
Given
Soda fountain bar
3620
1
3620
Soda-dispenser.com
2 pizza ovens
860
2
1720
Alibaba.com
Salad and Pizza/dessert bar
1250
1
1250
Alibaba.com
Commercial Refrigerator
3400
1
3400
Coldtechcommercial.com
Cash Register
180
2
360
ebay
Range /Oven
530
1
530
Restaurant Depot
Hood /Ancillary System
7000

14. 1
7000
Restaurant Depot
Laptop for management
285
1
285
Best Buy
Desk for mgmt.
25
1
25
Restaurant Depot
Staff Microwave
320
1
320
Restaurant Depot
Staff cupboard
120
1
120
Assumed
Staff refrigerator
700
1
700
Restaurant Depot
Tables
250
20
5000
Tableschairsbarstools.com
Chairs
40
80

15. 3200
Restaurant-services.com
Busing cart for restaurant
60
1
60
Ebay
Commercial Dishwasher
2100
1
2100
Ebay
Restaurant signage
130
1
130
brightledsigns.com
Total
48020.00
The above table gives a gauge of the capital spending plan
required for Papa Geo's eatery. For everything, sources and
suppositions utilized are clarified towards the correct side of
the table. Other nonspecific presumptions past those as of now
said are given beneath:
• Miscellaneous cooking and taking care of gear cost will be
viewed as operational costs and won't be promoted given the
fleeting (not as much as a year) utilization of such resources.
Cutlery, drinking mugs and so forth would be considered to fall
into a similar classification
• The add up to cost of investment is considered as capital

16. consumption because of its long haul nature of utilization
• Any installations like lighting and so on are considered as
operational costs and won't be promoted
The aggregate capital spending plan required is US$ 48020.00.
Significant segment of this financial plan are redesign and gear
costs, which is valid for eatery organizations.
4.0 Investment Analysis
Briefly describe the NVP, IRR, accounting rate of return, and
payback period for this analysis. Indicate the discount rate you
used, and how you arrived at it.
4.1 Cash flows
Provide an Excel spreadsheet screenshot that shows how you
arrive at the net cash flows for each period in your planning
horizon and describe its highlights.
4.2 NPV Analysis
Provide a screenshot of your Excel NPV analysis here, and
describe its highlights.
4.3 Rate of Return
Provide a screenshot of your IRR and accounting rate of return
calculations here, and explain the highlights.
4.4 Payback Period
Provide a screenshot of your Excel calculation of the payback
period for this venture.
5.0 Pro forma Financial Statements

17. 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]

18. 7.3 Appendix 1: [put a description here]
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week3/Worksheet_WK3.xlsx
__MACOSX/week3/._Worksheet_WK3.xlsx
week3/~$oject_WK3.docx.docx
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