Group Project Spring 2011 Data Block Centers in 2012 Center Growth rate Revenue per Center Capital Investment 50 250 $6,000 Batteries 100 Chargers 25...

In 2012, they plan to open 100 of these in California. Each year thereafter they plan to open 250 additional units.Batteries: 100 * $5,000 eachChargers: 25 at $250 eachTransfer machines: 10 at $500 eachThe investment for new centers will be incurred in the year prior to the year in which centers are opened. For instance, the investment for the 100 centers planned for 2012 will be incurred in 2011 and similarly through 2016 when the investment will be incurred in 2015. The investment in the 5th year or 2016 will be $500,000,000. Each center will need the following.Building and grounds for each center will be leased at an annual cost of $50,000 for each center. Administrative expense for each center is estimated at $250,000 annually.Each year, 20% of the batteries will have to be refurbished at a cost of $2,500 each. This should be considered as investment.Each recharging center is expected to generate revenue of $6,000 per day. This revenue per center is expected to hold constant over the timeframe of the project.Dailyoperational costs including utilities, labor and materials costs, but excluding batteries, will be $4,000 per station. Working capital of $2,500,000 is needed for Cash, Inventory, Accounts Payable, and Accounts Receivable starting in 2011and will increase by 15% per year.Corporate Administrative expense is $5,000,000 annually throughout the planning period and this includes research and development. Marketing is planned at $1,000,000 annually.The value of each center at the end of five years is expected to be $1 million each. Consider this a salvage value in year 5.Depreciation should be simplified by simply dividing the current investment in place by 5, which approximates five year straight line depreciation.The corporate MARR is 15% and tax rate is 18%. Based on a five year plan and with the data given below for each center, prepare an analysis and recommendation as to whether this project should be funded. A spreadsheet containing a Data Block for this problem is attached. Check it for accuracy.Prepare a income statement and free cash flow statement for the proposed project. Design and test alternative scenarios concerning the project.Submit your analysis as a management proposal including any recommendations or concerns.