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

General Battery Company (GBC) is planning to open Battery Exchange Centers throughout the U.S. where All-Electric car owners can exchange discharged batteries for fully charged ones in five minutes. They have developed and tested a few prototypes for the past year at a cost of $500,000.. In 2012, they plan to open 100 of these in California. Each year thereafter they plan to open 250 additional units.Operating cash of $2,500,000 is needed for Accounts Receivable, Accounts Payable, and other current costs starting in 2011and will increase by 15% per year.Capital Investment will be initially needed for each center as follows and 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 2015 when the investment will be for the growth in 2016. The investment in the 5th year or 2016 will be $500,000,000.Batteries: 100 * $5,000 eachChargers: 25 at $250 eachTransfer machines: 10 at $500 eachBuilding and grounds for each center leased at an annual cost of $50,000 for each center.Each year, 20% of the batteries will have to be refurbished at a cost of $2,500 eachEach 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.Daily operational costs including utilities, labor and materials costs, but excluding batteries, will be $4,000 per station.Corporate Administrative expense is $5,000,000 annually. Administrative expense for each center is estimated at $250,000 annually for each center throughout the planning period and this includes research and development. Marketing is planned at $1,000,000 annually per centerDepreciation to be calculated as straight line over 5 years Even though investment funds comes out of cash reserves in the year preceding the opening of centers, the depreciation is based on centers that are open.The value of each center at the end of five years is expected to be $1 million each. Company policy is to record this in the 6th year.The corporate MARR is 15% and use a tax rate of 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.Prepare an income statement and cash flow statement for the proposed project.