Case Specific Instructions - St. Clement's School
Your analysis section should include a NPV calculation.
Assume the RRR = 6% (the estimated borrowing cost of the loan).
Assume a loan (if taken) would be a 10-year loan, requiring annual interest paymentsof 6% of the borrowed amount, with the principal (amount borrowed) repaid in the 10th year.
Use a 10-year time period in your analysis.
Be sure to include onlyRELEVANT cash inflows and outflows (ignore taxes).
Be mindful of the effects of inflation (use the nominal approach, see appendix in chapter 21).
The analysis in this case is more "open ended" than the last case. It is imperative that you consider the alternative courses of action available, and their effects on cash flows. Each of these has unique implications for future cash flows. You may want to incorporate additional concepts (IRR, sensitivity analysis, payback method).
Case Study
General Instructions
Case studies require you to apply cost accounting techniques to a business scenario, and ultimately develop a recommended course of action based on your analysis.
Cases are meant to simulate real-world experiences, which means you may have to deal with incomplete information and various uncertainties. You will need to define the problem, sort relevant/irrelevant information, interpret and analyze information, come to a reasoned decision or course of action, and communicate your thoughts clearly.
Here are some steps that may help you in completing each case:
1.) Read the case from start to finish to get an overview.
2.) Skim any exhibits to see what information is provided.
3.) Find out who the decision maker is - that is the role you will be taking, what the immediate concern/problem/issue is, and why this concern has arisen.
4.) Read the case more carefully, highlight key information, make notes, write down ideas. Familiarize yourself with the details.
5.) Try to answer these questions:
a. What business is the organization in? What are its objectives? Strengths? Weaknesses? Opportunities? Threats? Who are its customers/stakeholders? What does it have to do well to satisfy customers/stakeholders?
b. What is the decision to be made/problem to be solved?
c. What facts are relevant/vital to the solution?
d. What do the facts mean for the problem?
e. What are the decision criteria?
f. What are the alternatives?
g. What is your evaluation of the alternatives, given the decision criteria? What are the pros and cons of each?
h. Which alternative would you choose? Why?
Write up Requirements
Your write up should include (in order):
1. An executive summary - identify the issue(s), and your recommended course of action.
2. Explanation of the problem -what criteria need to be considered in making the decision.
3. Analysis of the situation (including applicable excel tables).
4. Identification and evaluation of alternatives.
5. Your recommended course of action, and explanation.
Write ups should be no more than 5 pages single spaced (10 pages double spaced) of written text (excluding tables), 12 point, Times New Roman font, with clear headings for each of the five required sections. Include support for any calculations or numerical analyses in tables. You should label each table with a title and a reference (e.g. Table 1), and reference them accordingly in your write up.
Writeups should be completed in Microsoft Word. The best way to do the tables is to create them in Excel, and then copy and paste them into Word.
It is important to realize that cases generally do not have "right" and "wrong" answers. Sometimes the quantitative analysis is ambiguous, or there are qualitative considerations that prevent the decision from being "cut and dry". To that end, justifyingyour recommendation is more important than making the "right" recommendation.