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e This project would require increase of net working capital of $15 million to finance operations such as inventory purchases. This net working capital will be released at the end of the project's life. f Annual fixed expenses (excluding rent) is projected at $20 million. Included in fixed expenses are administration, sales and marketing expenses. Variable expenses would be 25% of annual revenue. g Xagan's board of directors has specified a required rate of return of 12% on this investment. h Xagan pays a corporate tax rate of 20%. Capital gain on asset disposal is charged at corporate tax rate. You will be required to write a management report in which the following points should be discussed. - Analyse the Investment proposals by using NPV and IRR and provide recommendations. You should also briefly comment on other investment proposal techniques that Xagan may use, and the limitations of using these techniques. - Provide an explanation on the different sources of funding available to the company, and their advantages and disadvantages and make recommendations as to how these funding sources are appropriate to the planned investment project. - Analyse the level of breakeven required should Xagan proceeds with the investment. - Prepare a forecasted cash budget for January to March 2023. - An evaluation of Xagan's performance or position during the same period. - A detailed Literature Review of the tools you have used such as capital investment techniques and budgets and their importance to the business case. - Other issues for management to consider that you think are vital for them to survive and make a profit. Details of the task CASE STUDY 1 - Global eSports Market - Industry Trends and Forecast to 2029. "The eSports market is expected to witness market growth at a rate of 16.5% in the forecast period of 2022 to 2029 , and is estimated to reach the value of USD 5.80 billion by 2029 . The increase in the use of product in various industries globally is escalating the growth of eSports market. The increase in popularity of video games across the globe acts as one of the major factors driving the growth of eSports market. The rise in emergence of esports as a professional career because of impressive international prize pools, one-toone sponsorships, streaming revenues and increase in popularity of the gaming tournaments accelerate the market growth. The rise in the infrastructure for the league tournaments and increase in the live streaming of games further influence the market." - Data Bridge Market Research, January, 2022 Xagan Corporation is a listed video game and entertainment company that specialises in the manufacturing of video gaming machines and development of video game contents. They have a collection of blockbuster titles that are available on other platforms. The company is keen to invest in building eSports arenas and venues. These will not only host international tournaments (which is projected to be a lucrative market due to increased exposure and interest in major tournaments), but could also serve as a learning hub for tech companies and students. These could potentially lead to program sponsorships and recruitment. Xagan Corporation is appraising the feasibility of investing in this new project. These will have to take into consideration the essential requirements for infrastructure, such as hardware (high speed connection with fiber optic cables, tables and chairs, screens etc) and software (operating and cybersecurity ecosystems). The following information involves required investment, projected revenues and expenses, and other information for this project. a Arena building and hardware assets facilities would have to be acquired, built and installed. These assets are estimated to cost $60 million, including installation cost. These would have to be fully paid before commencement of project. b. The land on which to build the arena would have to be leased from the state, at a monthly rental of $100000. c The infrastructure (building and assets) are expected to have a 10-years useful life, after which it will have to be replaced when new technology requires upgraded infrastructure. There is no scrap value at the end of asset's life. Depreciation on the new infrastructure will be at cost over 10 years using straight line method. d Annual revenue in dollars over the next 10 years are projected to be as follows: e This project would require increase of net working capital of $15 million to finance operations such as inventory purchases. This net working capital will be released at the end of the project's life. f Annual fixed expenses (excluding rent) is projected at $20 million. Included in fixed expenses are administration, sales and marketing expenses. Variable expenses would be 25% of annual revenue. g Xagan's board of directors has specified a required rate of return of 12% on this investment. h Xagan pays a corporate tax rate of 20%. Capital gain on asset disposal is charged at corporate tax rate. You will be required to write a management report in which the following points should be discussed. - Analyse the Investment proposals by using NPV and IRR and provide recommendations. You should also briefly comment on other investment proposal techniques that Xagan may use, and the limitations of using these techniques. - Provide an explanation on the different sources of funding available to the company, and their advantages and disadvantages and make recommendations as to how these funding sources are appropriate to the planned investment project. - Analyse the level of breakeven required should Xagan proceeds with the investment. - Prepare a forecasted cash budget for January to March 2023. - An evaluation of Xagan's performance or position during the same period. - A detailed Literature Review of the tools you have used such as capital investment techniques and budgets and their importance to the business case. - Other issues for management to consider that you think are vital for them to survive and make a profit. Details of the task CASE STUDY 1 - Global eSports Market - Industry Trends and Forecast to 2029. "The eSports market is expected to witness market growth at a rate of 16.5% in the forecast period of 2022 to 2029 , and is estimated to reach the value of USD 5.80 billion by 2029 . The increase in the use of product in various industries globally is escalating the growth of eSports market. The increase in popularity of video games across the globe acts as one of the major factors driving the growth of eSports market. The rise in emergence of esports as a professional career because of impressive international prize pools, one-toone sponsorships, streaming revenues and increase in popularity of the gaming tournaments accelerate the market growth. The rise in the infrastructure for the league tournaments and increase in the live streaming of games further influence the market." - Data Bridge Market Research, January, 2022 Xagan Corporation is a listed video game and entertainment company that specialises in the manufacturing of video gaming machines and development of video game contents. They have a collection of blockbuster titles that are available on other platforms. The company is keen to invest in building eSports arenas and venues. These will not only host international tournaments (which is projected to be a lucrative market due to increased exposure and interest in major tournaments), but could also serve as a learning hub for tech companies and students. These could potentially lead to program sponsorships and recruitment. Xagan Corporation is appraising the feasibility of investing in this new project. These will have to take into consideration the essential requirements for infrastructure, such as hardware (high speed connection with fiber optic cables, tables and chairs, screens etc) and software (operating and cybersecurity ecosystems). The following information involves required investment, projected revenues and expenses, and other information for this project. a Arena building and hardware assets facilities would have to be acquired, built and installed. These assets are estimated to cost $60 million, including installation cost. These would have to be fully paid before commencement of project. b. The land on which to build the arena would have to be leased from the state, at a monthly rental of $100000. c The infrastructure (building and assets) are expected to have a 10-years useful life, after which it will have to be replaced when new technology requires upgraded infrastructure. There is no scrap value at the end of asset's life. Depreciation on the new infrastructure will be at cost over 10 years using straight line method. d Annual revenue in dollars over the next 10 years are projected to be as follows

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