M5 Project Assignment

 

Assignment 2: Course Project—Cost-Volume-Profit Analysis with Capital Budgeting

In this assignment, your goal is to use CVP analysis in a presentation of your project to enable a prospective investor to decide if your project is worth investing in. You will apply the concepts of CVP analysis learned in Modules 3 and 4 to the project you selected in Module 2.

Review the

Course Project Guidelines

.

Assignment Overview:

From the Microsoft Excel worksheet you developed in Modules 3 and 4, create a basic pro forma statement necessary to convince someone to provide the start-up funding of the project and then use this information, along with other outside research to create a Microsoft Power Point presentation. The slides of your presentation should be visually appealing—only containing the key points while the speaker notes associated with each slide should provide the essential details.

Assignment Tasks:

To create a pro forma statement:

Summarize the company and explain CVP and Capital budgeting. Use outside resources to best explain CVP and capital budgeting.

Identify and list the various costs—fixed and variable, direct and indirect—required to execute the project.

Calculate the break-even point for the project and the expected financial returns. (This is the work you have been doing in the CVP template).

Make sure you show your Excel formulas or provide calculations so your instructor can review your work.

Save your final calculations as MS6010_M5A2_CVP_Lastname_Firstinitial.xls. The completed template must accompany the slide presentation.

Include a brief discussion of key points of any intangible benefits or costs associated with the project.

Supplement your pro forma statement with sufficient background information to enable a prospective investor to decide if your company is worth investing in.

 

• Open the Cost-Volume-Profit spreadsheet that you have been working in and calculate the break-even point.of your proposed project. (Access the CVP template if you have not yet begun this work)
• The project must use a 6.5% cost of capital and a tax rate of 25%.
• Complete IRR (Internal Rate of Return) and NPV (Net Present Value) for the project.

Make sure you show your Excel formulas or provide calculations so your instructor can review your work.

• You should have also considered key points of any intangible benefits or costs associated with the project and begun supplementing your pro forma statement with sufficient background information to enable a prospective investor to decide if your company is worth investing in.

• The detail must have enough historic data to give an investor an understanding of trends.
  You should also have sufficient written background so that a potential investor understands the business. Use the speaker notes area of your presentation to add background information that you would communicate verbally in a presentation. This background information should be 1 to 2 pages in length.

Submission Details:

Support your predictions and suggestions with scholarly resources and empirical evidence.

Use APA format to cite your sources.

Use this

APA Citation Helper

as a convenient reference for properly citing resources.

Your submission should include the following.

• Your MS Excel worksheet named MS6010_M5A2_CVP_Lastname_Firstinitial, detailing all calculations.
• A minimum of 15 Microsoft PowerPoint slides (full copy of slides with notes) presentation.
• Include the required information concisely highlighting only the key points necessary for the purpose of this presentation, which is to convince a prospective investor to decide if your project is worth investing in.
• Your presentation should include sections addressing the topics listed and presented in bulleted format, avoiding long paragraphs of content.

Support your predictions and suggestions with scholarly resources and empirical evidence.
Use APA format to cite your sources.

• Speaker notes totaling 2–3 pages providing the background summary and details for each slide.

Running Head: PROJECT 1

PROJECT 5

M2 Project Approval Input

Student Name

University

Introduction

Dr. Pepper Snapple Group, Inc. is soft drink Company based in the United States, and it focuses on the production, marketing, and supply of soft drinks. The company’s beverage products are categorized in two, the non-carbonated soft drinks and the carbonated beverages that are flavored. The company operates in three segments for it to be able to meet its customers’ demands. The departments are Soft drink Concentrates, Packaging department, and the Latin American soft drinks. The first segment, the beverage concentrates is accountable for production and sale of the carbonated beverages among other branded syrups and concentrates. The second section which is the packaging segment is responsible for production and distribution of the packaged soft drinks among other products through the direct delivery system to the retail outlets. The third portion focuses on producing and supplying syrups, concentrates and finished soft drink products.

Statement of the problem

Soft drink market is very competitive and also very profitable. Dr. Pepper Snapple Group, Inc. holds a market share of 14.7% positioning it in the third place after Pepsi-Cola which has 35.3% of its market share (Hill, 2012). Dr. Pepper Snapple Group, Inc. has defined its briefcase efficiently through concentrating on their sales and marketing resources.

The company’s marketing strategy will enable the organization to focus on the various market analyses which will allow the company to identify the impact the critical brands produced and how they could improve them to gain a more significant market share (Hoskisson, 2012). The ethnic community in America is rapidly growing with an estimate of 27% of the overall population. The firm has to meet the needs of this population for the organization to be able to improve its market share efficiently.

Objectives

The primary purpose for this proposal is to help the organization to come up with strategies that it will use to meet the consumer demand which will enable the firm to sustain and improve its market share (Calkins, 2012). The marketing strategy should allow the company to be able to minimize the risks of loss as well as the capital investments.

Action plan

The market analysis will enable the company to invest more funds to its considerable brands for more sustainable and profitable growth by strengthening the consumers and company’s relationship awareness (Lancaste, 2013). Also, by welcoming the third-party trademarks into their line of distribution, the firm will be more exposed to the new markets. The marketing strategy will enable Dr. Pepper Snapple Group, Inc. to focus on improving the presence of the products with a high margin return through setting up a convenience store, branding vending machines and other activities that will increase the in-store events.

Through aligning the economic interests, production and distribution services more market opportunities are provided to the company (Fifield, 2012). The marketing strategy will incorporate the information technology which will enable the company to improve its quality productivity and data integrity route. Technology also will allow the company to be in a position to deliver programs that prioritize its brands in the third party bottlers systems.

Management plan

To be able to attain the specified goals of improving the market share as well as minimize possible risks and the capital investment (Smith, 2012). Through the information gathered from the market, analysis sources show that the company expense will not be affected because the products that the targeted population need are not new products in the market. Also through the third-party distribution plan and the increase of the in-store activity contributes significantly to minimizing the cost of the advertisement.

Conclusion

Dr. Pepper Snapple Group, Inc. production, marketing, and distribution of its brands go through a profoundly invested marketing and promotion procedures to meet the consumers need. The marketing and distribution strategies allow the company to perform tests, observations, and analyses thus enabling it to be in a position to come up with a valid marketing plan for its products and the ability to venture into new markets. The company has been able to survive the competitive market of soft drinks due to its effort of investing in promotion and advertising. Also creating it awareness with its consumers through the collaboration with the third-party distribution and focusing on the ethnic population in America will enable the company to increase its market share in the soft drink industry.

References

Calkins, T. (2012). Breakthrough Marketing Plans: How to Stop Wasting Time and Start Driving Growth. London: Palgrave Macmillan.

Fifield, P. (2012). Marketing Strategy. Jordan Hill: Routledge.

Hill, M. E. (2012). Marketing Strategy: The Thinking Involved. London: SAGE.

Hoskisson, R. E. (2012). Strategic Management Cases: Competitiveness and Globalization. Mason: Cengage Learning.

Lancaste, G. (2013). Marketing. Jordan Hill: Taylor & Francis.

Smith, A. F. (2012). Fast Food and Junk Food: An Encyclopedia of What We Love to Eat. Santa Barbara: ABC-CLIO.

CVP

*

*

*

Sales price per unit

$75.00

*

Variable Cost per unit

$67.00

Fixed Cost

$100,000.00

Targeted Net Income

$0.00

(assume 0 if you want to calculate breakeven)

Calculated Volume

12,500

calculated

* inputted by user

Break-Even Point

=$100,000/$75-$67

=$100,000/$8

=12,500 units

Internal Rate of Return

0=937,500+937,500(1+IRR)

0=937,500+937,500+937,500IRR

0=1,875,000+937,500IRR

937,500IRR=-1,875,000

IRR=-2%

Net Present Value

NPV=-937,500+(75*12,500) (1-2%)

=937,500+937,500(1-0.02)

=937,500+918750

=1,856,250

M3 Working Ahead

Name

Institution

The Break-Even Point

The break-even point analysis is a system that assesses the margin of safety by comparing the revenues and the costs in a project. in most cases, the break-even point is calculated by comparing the amount of units that have to be sold in order to cover for the fixed and variable costs. In the case of Dr. Pepper Snapple Group, Inc, the break-even point analysis will be based on the number of units that the company has to sell in order to cover for all expenses.

Break-even point in units= Fixed Costs/(Sales price per unit-variable cost per unit)

=$100,000/$75-$67

=$100,000/$8

=12,500 units

Internal Rate of Return

The internal rate of return (IRR) is the interest rate that brings a series of cash flows to a present value of zero. IRR is used to measure the profitability of projects. In this case, it will be used to assess the profitability of the project undertaken by Dr. Pepper Snapple Group, Inc.

With a break-even point in units of 12,500, and a calculated volume of 12,500, the company can reach its break-even point within one period.

(NPV) 0 = P0 + P1/(1+IRR) + P2/(1+IRR)2 + P3/(1+IRR)3 + . . . +Pn/(1+IRR)n

0=937,500+937,500(1+IRR)

0=937,500+937,500+937,500IRR

0=1,875,000+937,500IRR

937,500IRR=-1,875,000

IRR=-2%

Net Present Value

NPV=-937,500+(75*12,500) (1-2%)

=937,500+937,500(1-0.02)

=937,500+918750

=1,856,250

MS60

1

0 Course Project Guidelines

Your course project will consist of a 1

5

–

2

0-slide Microsoft PowerPoint presentation. These slides will help you present your investment idea to the President and CEO of the public company. As such, the slides must be well crafted to help convince the leader of the company of the need for the investment, the possible risks, and potential returns. Remember, the slides should outline the key points to be made and not overwhelm the viewer with too many details. You will provide the details in the speaker notes for each slide. The slide presentation must include:

1.

Cover page

listing the company, project, date, and presenter.

2. Sufficient background so that a potential investor understands the business.

3

. The investment idea and summary justification.

4

. Enough historic data from the worksheet you develop in Modules 3 and 4 to give an investor an understanding of revenues, costs, expenses, cash flows, and potential returns in dollars and using capital budgeting analysis concepts to demonstrate viability.

5. The break-even of the project.

6. Your final analysis summary that details why the company should invest the money in this project.

7. Speaker notes in your Microsoft PowerPoint presentation to include background information that you would communicate verbally in a presentation. This speaker notes content should be the length necessary to explain the outline presented in the slides. Each slide must have the requisite speaker notes to explain the material/data presented in the slides as if you are making a formal presentation and expect to verbalize those words.

This slide presentation is due before the end of class on Day 5 of Module 5 and is worth

25

% of your course final grade or 2

50

points. Combined with the other submitted elements of the project, the total points allocated to this course project will be 500 points or 50% of your grade. The grading of this project will be extensive to match the percentage of course grade. Make sure you provide substantial work in the creating of this project.

Breakdown of Course Project Work

Module	Major Task	Points
1	Select public company and begin planning project.
2	Seek approval of the company, project investment idea, and justification by completing the Project Approval Input in the link provided.				30
3	Begin working on the Excel worksheet provided with the project to outline the revenues, costs, expenses, and resulting cash flows.
4	Submit the final Excel worksheet showing all data and calculations.
5	Submit Microsoft PowerPoint presentation complete with speaker notes before the end of class Day 4.	470

Grading Criteria

30

Calculations are complete and accurate.

30

30

40

50

Assignment Components	Proficient	Max Points
By end of Module 2, complete the Project Approval Input and answer the questions provided.	Selects US public company and provides name and stock symbol. Explains interest in the company and in the investment project.
Excel Worksheet Requirements:
Identify the various revenues, expenses, costs, expenses, and cash flows. If a manufacturing company and investment deals with projects, the analysis breaks down costs into fixed and variable, direct and indirect.	All costs, revenues, expenses, and cash flows required to implement the project are identified, listed, and summed appropriately	180
Calculate the CVP or break-even point for the project.		Calculations are complete and accurate.	15
Calculate NPV and IRR. Provides the numeric viability of the project investment.	25
Slide Presentation Requirements:
Includes a minimum of 15 slides	Each slide is formatted consistently with proper spelling and grammar.
Cover page	Cover page listing the company, project, date, and presenter	10
Company summary	Sufficient written background so that a potential investor understands the business.		40
Data from Excel Worksheet	Enough historic data from the graded worksheet to give an investor an understanding of revenues, costs, expenses, cash flows, and potential returns in dollars and using capital budgeting analysis concepts to demonstrate viability.
Analysis slides	Present the breakeven and other types of analysis for the project.		50
Final recommendations	Provide your final analysis summary that details why the company should invest the money in this project.
Speaker notes on each slide	Speaker notes in your PowerPoint presentation to include background information that you would communicate verbally in a presentation. This background information should be the length necessary to explain the outline presented in the slides. Each slide must have the requisite speaker notes to explain the material/data presented in the slides as if you are making a formal presentation and expect to verbalize those words.
Total:		500