08 May IS THIS A REASONABLE OPTION FOR THE COMPANY?
Risks: Use this section to discuss any risks that might affect the success of the project and how you have planned for those contingencies. In particular:
Internal. What are the company’s most significant internal risks and opportunities related to the project? How might they affect your financial estimates and how will you address them? Support your response with specific examples.
External. How will you address significant qualitative risks outside the company that might affect project success? Give specific examples. For example, how might culture or politics in the target country affect the proposed investment’s financial success? Natural disasters? How have you planned for these risks?
Microeconomic. Assess the microeconomic factors that might affect decisions about the proposed investment. Support your response with specific examples. For example, how competitive is the market you will be entering? How elastic is the price for your product or service?
Alternate financial scenarios. Use this section to discuss the sensitivity of your financial projections to different scenarios. Be sure to address:
How would your projected financial performance change if sales fall 20% short of or are 20% higher than your base assumption? What does your analysis of these two scenarios imply for the proposed investment? Justify your response.
What do the net present value, internal rate of return, and payback values from your base scenario and the sales variation scenarios above imply for the proposed investment? Be sure to explain how the time value of money affects your calculations and analysis.
Financing: In this section, compare the proposed loan to alternative financing methods. Specifically:
Weigh the pros and cons of raising money using internal financing mechanisms versus seeking funding through global capital markets via loans, commercial paper, bonds, or equity financing. Which might be viable alternatives should the loan not be approved? Support your answer with appropriate research and evidence.
Assess the viability of a business combination as a mechanism for expanding into the new market. Is this a reasonable option for the company? Why or why not? Support your answer with appropriate research and evidence.
Track Record: Use this section to persuade the lender that you are credit-worthy. You must:
Convincingly argue that your organization is on solid financial footing, and thus at a low risk for default, supporting your argument recent with appropriate financial statements, ratios, and other indicators of financial performance and health.
Convincingly argue for your organization’s trustworthiness, providing credible evidence of legal and ethical financial behavior. For example, this might include recent audit results; credit history; absence of significant lawsuits, recalls, or regulatory judgments; or other evidence designed to show that the company holds itself to the highest legal and ethical standards.
Questions and Answers: End your proposal by constructing a persuasive, evidence-based question-and-answer section that addresses additional financial questions you think the loan committee might ask, including legal and ethical concerns and why the loan would be attractive to the bank.
Milestone One: Investment Project and Justification (Parts A and B)
Milestones
In Module Four, you will submit a draft of Section II (Investment Project) and Section III (Justification), Parts A and B only, of the final project. Submit 8-10 pages of narrative, building on the narrative you began in the Module Three executive memo short paper. Include references to past financial results, growth rates, and other financial ratios as exhibited in the spreadsheet you created in Module Two, and end with appropriate reference citations. This milestone is graded with the Milestone One Rubric.
Milestone Two: Risks
In Module Six, you will submit a draft of Section IV (Risks) of the final project. Analyze internal and external risks and discuss how they might affect your financial estimates and how you might plan for such risks. You will assess the microeconomic factors that affect decisions about the proposed investment, and you will analyze alternative financial scenarios. This milestone is graded with the Milestone Two Rubric.
Milestone Three: Justification (Part C), Financing, and Track Record
In Module Seven you will submit a draft of Section III Part C (Justification), Section V (Financing), and Section VI (Track Record) of the final project. You will discuss the project’s most likely financial implications and the consolidated financial projection with and without the project; compare the proposed loan to alternative financing methods by weighing the pros and cons of raising money internally versus seeking funding through global capital markets; and assess the viability of a business combination as a mechanism for expanding into the new market. You will also use this section to persuade the lender that your company is credit- worthy by presenting appropriate financial information and by providing evidence of your company’s legal and ethical behavior. This milestone is graded with the Milestone Three Rubric.
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