You are a team of financial consultants hired to assist the client, Mr. Bansal.

1. Read the case individually and jot down your notes.
2. Discuss the case with your group.
3. Evaluate the proposed project for Mr. Bansal using the capital budgeting techniques (including IRR) you have learnt in the course so far (Chapter 8 NPV and other investment criteria). Assume the opportunity cost of capital is 12% (that is, 15% net of 20% tax).
4. Also, include a sensitivity analysis if Mr. Bansal decides to provide a fee reduction in the expected revenue for 5 years as follows:

Note: Use the following revised expected revenue structure with the fee reduction (all other assumptions remain the same as given in Exhibit 3). Fees are in Indian Rupees

	Year 1	Year 2	Years 3-5 (per year)
Total strength	35	50	80
New enrolments	35	25	40
Returning	0	25	40
Fees – New students (one time and annual)	17,500	18,000	18,500
Fees – Returning students (annual)		15,500	16,000

 

5. In 700-800, words discuss whether your group feels the project is financially viable, supported by your group’s calculation(s) and discussion. Make a recommendation to the client based on your group’s analysis in Steps 1-4. Please submit one Word document submission per group (and any supporting calculations using Excel)

 In place of an in-class group presentation (given that we are not on campus), create a short video in Zoom.  You have the option to nominate one group member to be your spokesperson or have more than one group member participate in this video. In 4-5 minutes create a ‘make your pitch’ video; highlight for the client the importance of capital budgeting techniques in decision-making including the use of NPV and IRR. Briefly explain to the client how the various techniques are used to base your team’s recommendation and determining whether the project is financially viable. Include the recording (MP4 file) when you upload your group’s submission

Answer rating: 100% (QA)

EXHIBIT 3 PROJECTED ANNUAL PROFITABILITYCASH FLOW ANALYSIS FOR FIVE YEARS IN 7 Year 3 Year 1 Year 2 ... View the full answer