Cons2010 assignmentnbsp the government is inviting


Assignment

The government is inviting proposals from suitably qualified local contractors for the design, finance and construction of tourist facilities at sites including Valencia, Caroni, La Brea (Trinidad) and Castara (Tobago).

Your firm, which has a patent valued at $100,000 for prefabricated panels made of local and recycled materials, intends to submit a proposal for eco lodges at the various sites. An architectural firm will be engaged for the design of the facilities, which your company will construct. A (3 year) business plan will be prepared to obtain financing for the project, should your proposal be successful.

The project is due to commence at the beginning of January 2017 with the design scheduled to be completed in 6 months. Manufacture of the prefabricated panels will commence at the beginning of May 2017, after installation of the new plant and equipment for the project, which will cost $600,000 and be depreciated on a straight line basis over 10 years (no salvage value). Works on site will also commence on May 1, 2017 with site preparation and foundation construction.

Investors will purchase (common) stock of $310,000 in the first year and there will be no more stock issued over the next 2 years. Your company will maintain a cash float of $110,000 in the first year of operation and also make a (long term) investment of $45,000 that year with a major supplier of the local materials. Income tax expense will be 25 percent (of earnings before tax) and a dividend of 20 percent (of earnings after tax) will be paid.

Listed below is other projected financial data at the end of the first three (3) years of operation:  

                                            2017                   2018                  2019

Accounts Receivable                47,500                 75,000                  115,000

Inventory                               50,000                 70,000                  130,000

Accounts Payable                    400,000               530,000                 640,000       

Revenue                                9,000,000             12,000000             14,000,000

Cost  of Goods Sold                6,900,000             9,690,000              11,000,000

Overhead Expenses                1,800,000             2,000,000              2,500,000

Long-term debt (mortgage)     380,000                370,000                 360,000

(Mortgage) Interest expense   3,500                    2,800                    2,200

The Architect to be contracted will work on the project along with the following key in-house personnel:

Project Manager

Plant Manager

Plant Supervisors

Safety Officers

Design Engineers

Engineering Technicians

Site Engineers

Clerks-of-Works

Prepare end of year Balance Sheets, Income Statements for three years and Cash Flow Statements for the last two years.

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