Spike's Indoor Beach Volleyball and Rock Climbing Inc. takes into account a specialty advertise in the Canadian games industry. As there were no indoor shoreline volleyball courts in Canada, Spikes confronted little rivalry. The volleyball crazed area of London; Ontario gave the ideal geological area to the operations of Spikes. Notwithstanding indoor shoreline volleyball courts, Spikes had likewise included an indoor shake climbing divider, a little eatery with a bar, and had additionally updated the lighting, warming framework, PC servers and had included an extra large flat screen TV in the parlor range.
Cash Flow Analysis
Total Cash Flows
NPV @ WACC
Data and Assumptions
Capital Expenditure for Expansion
Incremenetal Revenues for Expansion
Incremenetal Expenses for Expansion
- Perform a business size-up.
- Analyze the expansion qualitatively.
- List all the cash flows associated with the expansion, and classify them as relevant (cash, future and different), recurring or one-time costs.
- Perform a differential analysis, with sensitivity analysis where necessary. What is the return on investment? What is the payback period?
- As Earl Misener, would you go ahead with the expansion? CASH FLOW RELEVANT? RECURRING OR ONE TIME? Incremental bar revenue Incremental food revenue Additional league fees Beverage COGS Food COGS 5 days food inventory 5 days liquor inventory Accounts payable Accounts receivable Servers Bartender Cooks Maintenance Utilities Insurance Nets and balls Retaining wall/fencing Zoning and permits Stairway Patio furniture Washroom Amortization Bank loan Interest