| Course | FIN-3140 Small Business Finance |
|---|---|
| Module | Module 6 |
| Paper type | Final project: business financial plan |
| Length | About 1,144 words, 7 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | B.S.B.A. in Finance |
| Updated | October 2026 |
Free sample paper for FIN 3140 Module 6
Two Boats or One? A Business Financial Plan for Cape Point Whale Watch
Student Name
B.S.B.A. in Finance, Thomas Edison State University
FIN-3140: Small Business Finance
Mentor Name
Month Day, Year
Two Boats or One? A Business Financial Plan for Cape Point Whale Watch
1. Current Position
Cape Point earned $1.25 million of revenue in 2025, $212,070 of operating income and $154,670 before owner-level taxes, with a 17 percent operating margin. Its balance sheet carries an $820,000 boat loan against $165,000 of owner's equity, so its return on equity, about 94 percent, owes much to debt. Cash is strong in December, $212,000, but falls to its low point in April, which a $120,000 seasonal line of credit is planned to cover. The forecast for 2026 projects $1.38 million of revenue and about $228,000 before owner taxes, driven by passengers per trip.
The three stages of the plan built on one another. The first set out the business and its statements, the second added ratio analysis and a forecast, and this final stage adds the investment decision and the owner's personal plan. Reading the earlier stages together, the business is profitable and seasonal, with strong summer cash generation, a predictable spring low point and a balance sheet that relies heavily on one loan. Those features shape every recommendation below.
2. The Investment Decision
On peak summer days, Cape Point turns away an estimated 1,800 passengers a season, and it declines about 20 private charter requests a year because the boat is already booked. A used 90-passenger vessel would carry overflow and charter business and add shoulder-season trips in April and November, when the larger boat is too costly to run for small groups.
The revenue estimate is built from the turned-away passengers, the declined charters and 40 shoulder-season trips, and rises as the second boat builds its own bookings. The 10 percent discount rate reflects the owner's cost of capital: a loan rate near 7.5 percent and the higher return she should require on her own equity in a risky seasonal business.
| Assumption | Value |
|---|---|
| Purchase and refit | $700,000 |
| Added working capital | $20,000, recovered in year 10 |
| Life and salvage value | 10 years; $220,000 |
| Added revenue | $310,000 in year 1, rising to $430,000 by year 10 |
| Added cash operating costs | 62% of added revenue |
| Depreciation | Straight-line, $48,000 a year |
| Tax on added income, owner level | 28% |
| Discount rate | 10% |
3. Capital Budgeting Results
The project's net present value is positive, so at a 10 percent required return it would add about $80,700 of value to the business; its internal rate of return of 12.2 percent exceeds the discount rate. Graham and Harvey (2001) found that most firms rely on NPV and IRR, though many small firms still emphasize payback, and here the payback of 6.4 years is long relative to the owner's comfort, because much of the value arrives in year 10 with the vessel's salvage.
| Year | 0 | 1 | 2 | 3 | 5 | 10 |
|---|---|---|---|---|---|---|
| Net cash flow | ($720,000) | $98,256 | $107,832 | $111,936 | $117,408 | $371,088 |
| Measure | Result | |||||
| Net present value at 10% | about $80,700 | |||||
| Internal rate of return | about 12.2% | |||||
| Payback period | about 6.4 years |
4. Risk
The NPV is modest relative to the investment, so its sign depends on the assumptions. Cut the added revenue by a tenth and NPV drops to about $18,000; cut it by 15 percent and the boat loses value. If the salvage value were $150,000 rather than $220,000, the NPV would fall by about $19,500. The project is therefore acceptable but not robust. Two steps reduce the risk: securing three-year charter agreements with the two hotel partners before buying, and choosing a vessel whose resale market is active, so salvage is reliable.
Demand risk is the one that matters most, and it has a seasonal shape. A wet or windy July does more damage than a poor November, because the peak months carry most of the added revenue. The owner can test the assumption cheaply before committing: chartering a second boat for two peak weekends next summer would show whether the turned-away passengers actually book when space is offered, at a cost of a few thousand dollars rather than a $700,000 purchase.
5. Financing Plan
The loan payment of about $6,078 a month adds $72,930 a year of debt service. In the first year, the project's operating cash flow covers that payment with little margin, so the owner should reduce distributions in 2026 and 2027 and keep the seasonal line in place. The bank will likely require the new vessel as collateral and the owner's personal guarantee. Long ties to a single lender make credit easier for small firms, according to Petersen and Rajan (1994), which argues for borrowing from the bank that already holds the first boat's loan.
A lender will look at the debt service coverage ratio, cash available for debt payments divided by the payments due. In the first year, the project's own cash flow of about $98,000 covers the new loan's $72,930 about 1.35 times, which most lenders accept but with little room for error. The existing business's cash flow adds to that cushion, and showing the lender the combined coverage, along with the hotel charter agreements, will strengthen the application.
| Source | Amount |
|---|---|
| Owner's equity from retained 2026 earnings | $128,000 |
| Bank loan, ten years at about 7.5%, possibly with an SBA 7(a) guarantee | 512,000 |
| Seasonal line, temporary use for refit timing | up to 80,000 |
6. The Owner's Personal Financial Plan
Because the owner guarantees the business's debts, her personal finances are part of the plan.
Adelman and Marks (2014) emphasize that entrepreneurs often hold almost all their wealth in their businesses, so a personal plan that builds savings outside the company protects the owner if the business, or the boat, suffers a loss.
| Area | Current position | Plan |
|---|---|---|
| Emergency fund | Three months of household expenses | Build to six months, about $45,000, before the purchase closes |
| Insurance | Business liability; term life of $250,000 | Raise term life to $1 million, enough to repay both boat loans; add disability insurance |
| Retirement | No regular savings | Contribute $12,000 a year to a SEP-IRA; about $658,000 at 65 at 6% |
| Personal debt | Home mortgage only | Avoid new personal debt during the first two years of the second loan |
| Diversification | Nearly all wealth in the business | Build retirement and taxable savings outside the business |
7. Recommendation
Cape Point should buy the second vessel, provided the hotel charter agreements are signed first and the owner builds her emergency fund before closing. The investment adds value at a 10 percent required return and uses the company's turned-away demand, but its slim margin and long payback mean the owner should lower distributions for two years and protect herself personally with insurance and savings outside the business.
If the charter agreements cannot be secured, the owner should wait a season and repeat the peak-weekend test rather than buy on projections alone. The value of waiting is real here: a year of evidence costs little, while a vessel bought on optimistic demand would burden the business with debt payments through lean shoulder seasons.
References
Adelman, P. J., & Marks, A. M. (2014). Entrepreneurial finance (6th ed.). Pearson.
Graham, J. R., & Harvey, C. R. (2001). The theory and practice of corporate finance: Evidence from the field. Journal of Financial Economics, 60(2-3), 187-243. https://doi.org/10.1016/S0304-405X(01)00044-7
Petersen, M. A., & Rajan, R. G. (1994). The benefits of lending relationships: Evidence from small business data. Journal of Finance, 49(1), 3-37. https://doi.org/10.1111/j.1540-6261.1994.tb04418.x
Reading the FIN 3140 Module 6 assignment instructions
The final project, a Business Financial Plan worth a fifth of the grade, is built in three stages and handed in at term's end. This sample places the finished plan with Module 6, Capital Budgeting and Personal Finance, since its last stage draws on both. Expect to present the business's financial position, a forecast and financing plan, an investment analysis with standard capital budgeting measures and, often, the owner's personal finances. The company and project here are composites. The plan is built in three stages over the term and submitted at the end. Build each stage on the earlier assignments so the plan reads as one document, and keep the whale-watching numbers consistent from the statements to the capital budget.
Inside the FIN 3140 Module 6 example
The plan opens with the company's position and forecast, condensed from earlier modules. Before any result, the investment section explains the second boat's opportunity and tabulates its assumptions. Results appear in a cash flow table and a table of NPV, IRR and payback, followed by an explanation of why the measures differ. A risk section tests revenue and salvage, the financing section sets out sources and debt service, and the owner's personal plan appears in its own table. A short recommendation states the decision and its conditions. New sections test demand before purchase, compute debt service coverage and weigh the value of waiting a season. A financing table shows each source and its cost.
Where the marks sit in the FIN 3140 Module 6 rubric
The final project carries 20 percent of the FIN-3140 grade. Mentors look for a plan that integrates the course: accurate statements and forecasts, correct capital budgeting calculations with assumptions stated, a financing plan that fits the business and a personal plan for the owner where the course calls for one. Interpreting the measures, including what a long payback means for a small business, and testing the key assumptions show the financial judgment the course aims to develop. A clear recommendation with conditions completes the plan. Mentors also credit plans that combine business and personal finance, since the owner's guarantee links them. A recommendation with conditions, rather than a simple yes, shows mature judgment.
FIN 3140 Module 6 help from the desk
Financial plans lose credit for reporting NPV without stating the assumptions behind it, for ignoring risk when the NPV is small and for leaving out how the investment will be financed and serviced. List every assumption in a table. Compute NPV, IRR and payback and explain any disagreement among them. Test the assumptions that matter most. Show the debt service and whether cash covers it. Include the owner's personal position when the business depends on her guarantee. A free first sample of your own FIN-3140 final project is available on request. Show NPV, IRR and payback together and explain why they differ. Tie the personal plan to the business risk.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Thomas Edison State University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
More FIN 3140 and B.S.B.A. in Finance sample papers
- FIN 3140 Module 1: Written Assignment: Financial Management Concepts for a Small Business
- FIN 3140 Module 2: Written Assignment: Building and Reading a Small Firm's Financial Statements
- FIN 3140 Module 3: Written Assignment: Profitability Ratios and Seasonal Working Capital
- FIN 3140 Module 4: Written Assignment: Forecasting Sales, Statements and Financing Needs
- FIN 3140 Module 5: Written Assignment: Time Value of Money Problems for a Second Boat and a Retirement Plan
- FDR 4400 Module 3: Written Assignment: Special Events, Planned Giving and Capital Campaigns Compared
- FIN 3210 Module 5: Written Assignment: Options Strategies, Put-Call Parity and a Futures Hedge
- FIN 3820 Module 2: Written Assignment: Measuring a Bank's Interest Rate Risk
- FIN 3340 Module 1: Written Assignment: The Global Financial Environment for a First-Time Exporter
FIN 3140 Module 6 questions, answered
Where can I find a free FIN 3140 Module 6 sample paper?
The whale-watching company financial plan above evaluates a second vessel with NPV, IRR and payback, tests the risks, sets a financing plan and adds the owner's personal plan.
What is net present value?
Future cash flows discounted at the required return, less the outlay; above zero, the project adds value.
Why can payback disagree with NPV?
Payback ignores cash flows after the payback date and the time value of money, so a project with late cash flows can have positive NPV but slow payback.
What should a small business financial plan include?
The current financial position, forecasts, financing needs and sources, analysis of major investments and, often, the owner's personal finances.
Why include personal finance in a business plan?
Because small business owners often guarantee loans and hold most of their wealth in the business, so their personal position affects the business's risk.