Finance/Economic

• 3 pages max, double spaced, 12pt font, not including tables/charts/etc

o   Each table/chart needs to be numbered and have a label and a caption describing it, so it stands on it own.  Make sure to reference all tables/charts in the text.

• Deliver paper & spreadsheet
• Give executive summary upfront, no fluff.  Do not present a bunch of info and then give answer at end.
• We’re French, no dollars in this case
• Under current assumptions NPV of machine is 92,495 Euro.  Do not carry out precision out to 92,495.24; 92,500 is probably better based on assumptions
• Forecast exchange rates based on inflation rates of France & Mexico
• Use 7%/year for inflation rate as this is the given
• For discussion, can recalculate NPV with other inflation rates
• Financing the purchase of equipment is not focus of project; only focus on whether or not we should pursuit purchase of equipment.  Do not include costs of financing.
• Exhibit 2 states thousands of pesos, but is likely just pesos
• Good to do an analysis that determines what scenarios would equate to an NPV of zero
• Assume we’re at the end of 2007, beginning of 2008, and all numbers in Exhibit 2 are at similar annual point in time.
• Sensitivity analysis should show what variables are most impactful to NPV.  Start paper with identification of most important variables, analysis of them, and then on to less important things

o   Sensitivity analysis = change one variable at a time

o   Also consider Scenario analysis ie multiple changes ex. = Depression of Mexican economy, hyper-inflation, labor strikes, etc

o   Do not include a separate excel page for each sensitivity analysis

• Look at break-even analysis
• How many printer cartridges do we need to process to make this worth while?
• Evaluate labor savings; spreadsheet is a little odd using per-unit labor costs opposed to staff quantities of 10 to 3 or 4
• If peso appreciates future savings increase—therefore we want peso to appreciate

• Is the project worthwhile in Mexico?