Simulation 1: Implementation is Always Messy
Input the information from the ‘cash flow data’ document into the Cash Flow template. After inputting all information, label this worksheet as ‘year 1 estimate’
2. Examine the actual cash-flow budget for year 1. Copy this worksheet into your excel document as a 2nd worksheet labeled ‘year 1 actual.’
3. A number of unexpected realities confronted you as you implemented Year 1’s budget. These included:
· Could not hire any staff until April due to a very weak applicant pool
· Because of a lack of staff, donations were not successful until May. And even then, donations per month were unpredictable
· No students applied for the nonprofit organization’s scholarships
· Utility expenses varied widely, especially in the winter months which were colder than normal
· Office expenses were also somewhat unpredictable due to three printers and toner for the printers having to be purchased.
· For the August board meeting, bad weather forced three of the board members to change their flight in order to arrive at the board meeting on time. These changes totaled $3500.00
· Additionally, during the board meeting, one member submitted a $5000.00 expense for a weekend of golf and dinners with potential donors. The member claimed this expense was used to help bring in more donations. The expense was paid.
· Additional expenses were generated during the board meeting due to the following unexpected events:
o All board members flew first class on planes to Michigan
o One board member rented a limousine from the Detroit airport to Mt. Pleasant
<Both of these expenses were paid>
4. Based on this information, develop a budget for Year 2. Include this budget as a new worksheet in your document (thus, your excel document should have three worksheets: year 1 estimate, year 1 actual, and year 2 estimate).
5. Also, write a budget narrative for each of your line items for Year 2. That is, justify why the amount of money is needed for each line item. Additionally, include any other policy ideas you think are needed to control the budget for year 2.
Simulation 2: Revnue Estimation
The excel spreadsheet has property tax revenue for a locality. In the first worksheet labeled “Property Tax Data” you are given property tax revenue for the years 1980-2006. Based on this data, your job is to estimate property revenue for years 2007-2012 using the Simple Moving Average (SMA) technique, the Transformation Moving Average (TMA) technique, and the Exponential Smoothing Technique (EXS). As a result, you will have three different estimations for property tax revenue for years 2007-2012. These revenue estimations have to be done in excel by using the “excel equation option.”
Next, you have to determine which estimation technique generates the most accurate estimate. In the second worksheet labeled “Property Tax Data Actual 1980-2012” you are given the actual property tax data for years 1980-2012. With the actual property tax data from years 2007-2012, calculate the percentage error of both of your estimates annually for years 2007-2012. These percentage error estimations have to be done in excel by using the “excel equation option.”
Third, generate three “line charts” (also called scatterplots) in excel that show the actual property tax data compared to the estimated property tax data for years 2007-2012 for the SMA, TMA, AND EXS techniques.
For this simulation, I want you to email me one excel document with: the SMA, TMA, and EXS estimates for years 2007-2012, the percent errors for the SMA, TMA, and EXS estimates for years 2007-2012, and the three line charts showing the SMA estimate compared to the actual property tax data for years 1980-2012, the TMA estimated compared to the actual property tax data for years 1980-2012, and the EXS estimated compared to the actual property tax data for years 1980-2012
Note: In order to do well on this simulation, you should structure your excel document so that I can easily follow your equations and calculations.
The city of Harris Harbor has recently decided to build a waste incinerator for non-industrial, non-hazardous solid waste (e.g. typical household garbage). They have done this for two reasons. First, the city has no landfill. The city currently ships all of its garbage to a rural county in Northern Michigan. Recently the fees for shipping this garbage increased by over 700% over three years and the city can find no cheaper area to ship its waste to. Second, the city hopes to use the incinerator as a revenue generator. It is hoped that localities throughout the state will start to ship their garbage to Harris Harbor for
Simulation 3: Cost Benefit Analysis
Instructions
The excel workbook for Simulation 3 is located on blackboard. The workbook contains costs and benefits for three different project proposals (projects A, B, and C) to build the new waste incinerator in Harris Harbor.
1. Conduct a cost-benefit analysis (with net present value calculations) for each of the three projects. Assume a constant 5% discount rate throughout the lifetime of each project. Make sure to show the calculations behind your answers. I will be grading you based on the calculations you turn in.
2 Based on the cost-benefit analysis, tell the city which project proposal (project A, B, or C) to choose. Why should that project be chosen over the other projects?
3. Do you have any concerns about the cost and benefit data presented in project proposals A, B, or C? If so, identify these concerns and state what the city should do to address them.
