Spread Of Covid-19 Report 2022

Think of a new project the company could undertake in response to the new business environment resulting form the COVID-19 effect. A potential project should last for 5-10 years and account for no more than 10%-30% of the firm’s overall operations. This project cannot be of average risk to the firm. Using the subjective approach to estimating discount rates, describe how you would adjust the WACC to find the discount rate for this project. Describe which project cash flows need to be considered were you to calculate the NPV of this project. Be as specific as you can but no numbers are required, just demonstrate that you understand all the relevant cash flows for this project. Will this project increase or decrease the risk of the firm? Which risk, systematic or unsystematic? For company- celestica.com

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Business Report
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Table of Contents
Project Investment Analysis............................................................................................................2
References........................................................................................................................................4

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Project Investment Analysis
The spread of COVID-19, the disease that is caused by the Coronavirus, has majorly
infected more than one million people globally. Hospitals and Medical Centres need well
supported medical devices and health manufacturing company are well responding and
answering to the same in this rush hour (COVID-19, 2020). Data Management and effectiveness
in well handling the operations of the business comes to a challenge when the cloud computing
and data centres have a limited amount of capability in well helping them in the field of Artificial
Learning and Machine Learning Technologies that are well deployed for tackling these
situations. The new project initiated by the Celestica Company would be well focusing on
catering and delivering an innovative solution that would be combining these capabilities into the
IT Systems (Capital Equipment | Celestica, 2020). As an initiative the company can well provide
IT System manufacturers with the storage support, computation, hyper-converged and switching
systems and subsystems. Now these can be well used by companies for building a resilient cloud
architectures and high-speed communications networks system (Enterprise and Cloud Solutions |
Celestica, 2020). The project would be named as Enterprise and Cloud Based Solutions under the
Celestica Company and would be well meeting on various demand services, computer networks,
storage, applications and other range of resources that are well accessed via the internet or are
generally provided through another provider's shared cloud computing infrastructure.
The above operations would be well initiated by the company and would be currently %
of the current operation whereby % of the specialized workforce would be dedicated for the
same and would be working on the given project. The project investment would be requiring an
initial investment of $3 Million. The initial investment for the company is taking on an

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assumption basis and has been well aligned with the company’s current set of operations and
business activities. Now these investment will be in the form of purchase of assets, hardware,
software and other required tools. Risks are two involved in the project and these are well in the
form of the unsystematic risk of the company which would be well in the form of changing
technology and business environment for the company. The revenue or cash flows associated
with the investment will be coming in the form of $1.5 Million that the company well expects to
receive from the same (Precision Machining | Celestica, 2020). Expenses will be in the form of
salaries, rent, maintenance and other miscellaneous expenses. Taxes would be charged at 30%
and the discount rate that would be applied for the project would be around 10% that would be
well aligned with the associated risk level of the project. Expenses are going to remain the same
for the company, however it is estimated that the revenue growth will be seen by a percentage
amount of 10%.
After taking all the cash inflows and cash outflows from the project it is well expected
that the project on a whole would be creating a value that would be equal to the NPV estimated
that is $47,919 and the internal rate of return for the project was calculated to be 10.6%.
Project Investment Analysis
Particulars Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Initial Investment -3,000,000
Revenue 1,500,000 1,650,000 1,815,000 1,996,500 2,196,150
Expenses
Salaries 500,000 500,000 500,000 500,000 500,000
Rent 50,000 50,000 50,000 50,000 50,000
Maintenance 75,000 75,000 75,000 75,000 75,000
Miscellaneous Exp. 25,000 25,000 25,000 25,000 25,000
Total Expenses 650,000 650,000 650,000 650,000 650,000
Cash Flow Before Tax 850,000 1,000,000 1,165,000 1,346,500 1,546,150

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Tax@30% 255,000 300,000 349,500 403,950 463,845
Cash Flow After Tax -3,000,000 595,000 700,000 815,500 942,550 1,082,305
Discounting Factor @ 10% 1.00 0.91 0.83 0.75 0.68 0.62
Discounted Cash Flows -3,000,000 540,909 578,512 612,697 643,774 672,026
Net Present Value 47,919
Internal Rate of Return 10.6%

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References
Capital Equipment | Celestica. (2020). Retrieved 12 April 2020, from
https://www.celestica.com/our-expertise/markets/capital-equipment
COVID-19. (2020). Retrieved 12 April 2020, from https://www.celestica.com/about-us/covid19
Enterprise and Cloud Solutions | Celestica. (2020). Retrieved 12 April 2020, from
https://www.celestica.com/our-expertise/markets/enterprise-and-cloud-solutions
Precision Machining | Celestica. (2020). Retrieved 12 April 2020, from
https://www.celestica.com/our-expertise/services/precision-machining