WIL PROJECT CASE STUDY ORIENTATION Week 3 Applicable VLO's for This Week's Case Study 2. Integrate knowledge of capital investments, credit planning, and finance into relevant aspects of work. This Week's Detailed Case Study Information Finance was your favorite subject at Lambton College. After joining the labour force, you realized the value of your education from Lambton College, and now comes the time to apply this knowledge. You will utilize your knowledge of capital investments, credit planning, and finance, to recommend the best course of action for the company. Mark is a successful business owner, his modern approach to retailing enabled his business to post double digit percentage growth rates. When he inherited this business from his dad 10 years ago, everything was different. The company at that time was drowning in debt, and its concept to retailing was standard, thus it faced a lot of competition from other retailers. He spent his nights thinking about the business and analyzing what could be done. He experimented a lot and finally figured out the correct formula for success, which he still uses on daily basis. His concept is pretty simple; focus on technology to minimize costs and boost revenues. In order to follow this strategy his business requires a lot of capital investments. The equipment that he buys usually depreciates pretty fast and requires replacement over several years. He carefully plans the capital investments because he knows that sound financial management is crucial to his business success. So now comes the time to buy a new piece of equipment. The Artificial Intelligence Point of Sale System" (AIPOS). He has two options, to buy the basic AIPOS, or the advanced AIPOS. The expected cash flows for each option are detailed below. The AIPOS equipment will be salvaged after 5 years of use. AIPOS Basic Year Cash Flow Comment 2022 $(14,000,000.00) Includes installation costs 2023 $ 1,500,000.00 2024 $ 4,200,000.00 2025 $ 1,500,000.00 2026 $ 5,600,000.00 2027 $ 14,000,000.00 Includes salvage value Cost of Capital is 15% Comment Includes installation costs AIPOS Advanced Year Cash Flow 2022 $(42,000,000.00) 2023 $ 2,800,000.00 2024 $ 7,100,000.00 2025 $ 21,000,000.00 2026 $ 21,000,000.00 WIL PROJECT CASE STUDY ORIENTATION Week 3 Includes salvage value 2027 $ 11,200,000.00 Cost of Capital is 15% Your task is to analyze the above capital projects, and reach a capital decision based on (IRR, NPV, and Payback) In order to finance this project, the company has three options: Line of Credit Secured Loan Corporate Credit Card Which option should be selected and why? Deliverables, Format and Marking Scheme for This Week's Case Study Evaluation: Correct calculation of: NPV, IRR, and Payback (2%) Correct project selection (1%) Selecting the appropriate credit facility, and justifying the selection (2%) Note: assume any missing information. Clearly state your assumptions in your submissions. Summarize your findings in a two-page word document