Week 4 Grading RuicsPosted on Mar 3, XXXXXXXXXX:00:00 AM Week 4 Course Project Assignment Grading...

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Week 4 Grading RuicsPosted on Mar 3, XXXXXXXXXX:00:00 AM    Week 4 Course Project Assignment Grading Criteria    Points    Discussed a summary of the client needs.    15    Discussed advantages and disadvantages of debt financing.    20    Discussed advantages and disadvantages of equity financing.    20    Discussed recommendations for a financing strategy.    15    Included complete eakeven analysis based on given price analysis and cost.           20    Met minimum page length and used proper grammar and APA formatting.    10    Total    100    Discussion Forum Grading Criteria    Points    Student answered all of the questions thoroughly in their initial post. Initial post has coect spelling and grammar. Student includes references if applicable.    15    Student meets the minimum requirements of replying to at least two students in the forum. Reply posts contain coect spelling and grammar. Includes more than one sentence.( 5 points for each reply post)    10              Total    25Module 04 Course Project - Funding ProposalFor this part of the course project, you will demonstrate your ability to identify how firms raise funds through the use of debt, equity, and retained earnings.Your client, Smart Clean, Inc., is a cleaning service for office and industrial locations. Smart Clean has been in business for 5 years and has shown steady revenue growth each year. The owner originally started the business using a business loan. The owner has $10,000 remaining on the loan after steadily making payments and has an excellent personal and business credit history.The owner wishes to expand the Smart Clean business into three new teitories, needs an infusion of capital, and is looking for $50,000 in order to make the expansion.The expected fixed costs for the cuent business and expansion is $75,000. Smart lean’s average charge per job is $ XXXXXXXXXXThe variable costs per job is $35.00.To complete this assignment, write a 5-page, APA formatted proposal that includes the following parts:· Summary of client needs· Advantages and disadvantages of debt financing· Advantages and disadvantages of equity financing· Recommendation for a financing strategy for Smart Clean· Complete eakeven analysis (based on given price analysis and cost)If you need assistance with using Microsoft Word, please visit the Video Tutorials page in the Course Materials folder.Submit your completed assignment by following the directions linked below. Please check the Course Calendar for specific due dates.Save your assignment as a Microsoft Word document. (Mac users, please remember to append the ".docx" extension to the filename.) The name of the file should be your first initial and last name, followed by an underscore and the name of the assignment, and an underscore and the date. An example is shown below:Jstudent_exampleproblem_101504

Kushal · Accepted Answer

Summary of client needs - 
There are two ways in which the firms can grow in the business - 1.Organic growth,  2. Inorganic growth 
When the firm grows organically,  they try to expand the business by opening more stores, trying to sell more and more similar products that they have been producing and increasing the revenue. Inorganically, firms do engage into merger and acquisition activities to increase the revenue. 
Here, our client, Smart Clean, needs to expand the business and they are evaluating the options of financing for the investment or the capital outlay that will be needed to do the same. Smart Clean needs to expand and That will require approximately 75000 dollars. The options that our client has are - 1. Debt financing,  2.Equity financing , 3. Retained Earnings. 
We will critically evaluate all three options and choose how the Smart Clean should go ahead as far as the mode of expansion is concerned. 
Advantages and disadvantages of debt financing - 
Advantages -
1. Cost of debt - As compared to the cost of equity, the cost of debt is always on the lesser side.  This has to do with the sequence of claims on the residuals of the firm, in case the company goes bankrupt. Generally, the bondholders are above the shareholders when it comes to the collection of the obligations and bondholders are paid first. 
2. Tax shield - Whenever the loan is taken,  the interest payments are made and this will go down in the income statement. Since this expenses will decrease the income tax expense for the firm, the outflow of the taxes is lesser and hence the overall post tax cost of debt is even lesser. 
Disadvantages -
1. Bankruptcy costs - Due to increase in the debt financing, the bankruptcy costs for the firm increases. The costs of equity also increases due to higher gearing and this will lead to higher weighted average cost of capital for the whole firm. 
2. Business cycles adverse impact - Firms, where the fixed costs are high,  business cycle variability impacts them more than as compared to the firms where the fixed costs are lower. The interest expense increases the fixed costs for the firm since they interest expense remains fixed until you pay down the debt. 
3. Weak balance sheet - Higher the leverage,

Week 4 Grading Rubrics Posted on Mar 3, XXXXXXXXXX:00:00 AM Week 4 Course Project Assignment Grading Criteria Points Discussed a summary of the client needs. 15 Discussed advantages and disadvantages...

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