With the knowledge that the success of the project depends on its capital budget, estimating the net present values for the next five years will help the entrusted specialists. In addition to the total expenses incurred throughout the project, economists and the other initiative stakeholders need to consider the equipment deprivation to guarantee that they set aside enough financial resources that would sustain the existence and operation of the football team upon its relocation to the city (Kengatharan, 2016). Thus, assessing the capital budget presented will determine the likelihood of the initiative realizing its aims.
Specifically, the information included in the excel spreadsheet estimates the amount of financial resources to be used for five years. With the project depending primarily on ticket sales, the number of vouchers sold is predicted to increase every year. Subsequently, the amount collected is used to facilitate the various expenses such as the stadium’s rent as well as other miscellaneous resources used to oversee the daily procedures aimed at overseeing the smooth operations within the facilities. Notably, approximately $10,000 is used every year to repair or replace depreciated equipment and the stadium. Importantly, with the cash inflow exceeding the cash outflow, it is evident that the relocation of the football team to the city will have a beneficial influence on the lives of the individuals residing within the surrounding environments (Batra & Verma, 2017).
For instance, although the net present value for the first year was $2,610,000, the subsequent years recorded improved outcomes, with the fifth year recording about $4,800,000. With the information presented in the spreadsheet, project managers and the other entrusted stakeholders have clues on the amount of financial resources that would facilitate the development and sustainability of the initiatives.
References
Batra, R., & Verma, S. (2017). Capital budgeting practices in Indian companies. Indian Institute of Management Bangalore Management Review, 29(1), 29-44.
Kengatharan, L. (2016). Capital budgeting theory and practice: a review and agenda for future research. Applied Economics and Finance, May, 3(2).