| Course | IBF-5070 Financial Modeling |
|---|---|
| Module | Module 1 |
| Paper type | Module 1 written assignment: introduction to financial modeling |
| Length | About 665 words, 5 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | MBA in Finance |
| Updated | October 2026 |
Free sample paper for IBF 5070 Module 1
Building the Cumberland Solar Model the Right Way: Structure Before Numbers
Student Name
MBA in Finance, Thomas Edison State University
IBF-5070: Financial Modeling
Mentor Name
Month Day, Year
Building the Cumberland Solar Model the Right Way: Structure Before Numbers
Introduction
Bayshore Renewables owns four operating solar farms in southern New Jersey with 180 MW of capacity. Its board will decide next year whether to build a fifth, a 60 MW project in Cumberland County that would cost roughly $94 million. The decision will rest on a financial model, and the board will ask questions the analyst cannot predict today: what if the power price is lower, what if construction costs rise, how much can the project borrow? Bodmer (2015) argues that a model should be designed around the decisions it supports, so the first step is to write down those questions before opening a spreadsheet.
The Question the Model Must Answer
The model must answer three questions: whether the project creates value at Bayshore's required return, how much debt it can carry and which assumptions most affect the answer. These questions decide what the model needs. Value requires after-tax free cash flow over the project's 35-year life. Debt capacity requires annual cash flow available for debt service and a test of coverage. The third question requires that every important assumption sit in one place, where it can be changed and the results traced.
Structure: Inputs, Timeline, Calculations, Outputs
The model will have five kinds of sheet. An input sheet holds every assumption, each with its unit, source and date: capacity, expected generation, power purchase agreement price and escalation, operating costs, construction cost, tax rates and financing terms. A timeline sheet defines periods, monthly during the 18-month construction and annual during operations, with flags that switch on when construction starts, when operations begin and when the contract ends. Calculation sheets build revenue, operating costs, taxes, depreciation and cash flow, each referring only to inputs, the timeline and earlier calculations. An output sheet reports value, returns and coverage. A check sheet confirms that the model balances.
| Sheet | Contents | Rule |
|---|---|---|
| Inputs | Every assumption, with unit and source | No formulas except simple conversions |
| Timeline | Periods, dates and on/off flags | One timeline used by every sheet |
| Calculations | Revenue, costs, taxes, cash flow, debt | No typed numbers inside formulas |
| Outputs | NPV, IRR, coverage, charts | Links only, no new calculations |
| Checks | Balance and sign checks | Every check feeds one master flag |
Programming Practices
Four practices keep the model auditable. Each formula is written once and copied across the timeline, so a row behaves the same in every year. No number is typed inside a formula; an escalation rate of 2 percent lives on the input sheet, not as "1.02" buried in a revenue row. Flags, which take the value one or zero, switch items on and off, so the change from contract to market prices happens in one visible place. Calculations flow from left to right and from top to bottom, so a reader can follow them without jumping between sheets.
Why Auditing Matters
Spreadsheet errors are common. Powell et al. (2008) reviewed the research on spreadsheet errors and found that most studies of operational spreadsheets discovered errors in a large share of them, though the studies measured errors in different ways. A later field audit by the same authors found that many errors had small effects but a few changed results enough to alter decisions (Powell et al., 2009). For Bayshore, a single misplaced reference in the tax calculation could swing the project's value by millions of dollars. The check sheet will therefore test that cash balances never go negative unnoticed, that debt is fully repaid by maturity and that annual and monthly totals agree, and a colleague who did not build the model will review it before the board sees it.
Conclusion
A model built to answer specific questions, with inputs, timeline, calculations and outputs kept apart, and with checks that a second person can run, will let Bayshore's board test the Cumberland project with confidence. The later modules of this course add the forecasts, risk analysis and scenarios; this structure determines whether those additions can be trusted.
References
Bodmer, E. (2015). Corporate and project finance modeling: Theory and practice. Wiley.
Powell, S. G., Baker, K. R., & Lawson, B. (2008). A critical review of the literature on spreadsheet errors. Decision Support Systems, 46(1), 128-138. https://doi.org/10.1016/j.dss.2008.06.001
Powell, S. G., Baker, K. R., & Lawson, B. (2009). Impact of errors in operational spreadsheets. Decision Support Systems, 47(2), 126-132. https://doi.org/10.1016/j.dss.2009.02.002
IBF 5070 Module 1 instructions, in plain terms
In IBF-5070, five written assignments make up 40 percent, beside seven forums, two live sessions and the final model. The first assignment introduces the methodology used to assemble a financial model. Expect questions about a model's purpose, the separation of inputs, calculations and outputs, timelines, good programming practice and auditing. Answer through a concrete model you could build, since later assignments ask you to build one. Use Bodmer's text for the methodology and research on spreadsheet errors for the case for discipline. Describe what each part of the model does and why, rather than listing features. If the prompt asks about a model you use at work, describe its structure honestly, including any weaknesses, and say how you would rebuild it to the standard the course teaches.
Inside the IBF 5070 Module 1 example
The paper begins with a decision a board must make and the questions the model must answer for it. It derives the model's requirements from those questions, then sets out a five-sheet structure with a table that gives each sheet's contents and its rule. A programming section explains four practices with examples drawn from the project. An auditing section uses research on spreadsheet errors to justify a check sheet and an independent review. The conclusion explains how the structure supports the later modules, where forecasts and risk analysis are added, so the paper sets up the course's running case. Every practice it recommends is illustrated with an item from the solar model, such as the escalation rate or the contract flag, so the advice never floats free of the case.
IBF 5070 Module 1 rubric: what earns full marks
Mentors reward correct modeling ideas used on a believable case, sound reasoning and clean APA writing. In this first assignment, answers that begin from the decision a model supports, and that explain how structure makes a model auditable, show understanding beyond a list of tips. Specific examples, such as where an escalation rate should live, demonstrate that the student could build what they describe. Supporting the case for checks with research earns more than asserting it, and a clear table of the model's parts helps the reader follow the design. Papers that explain how the check sheet works, and who reviews the model, show an understanding that a model is used by people other than its author.
IBF 5070 Module 1 help: mistakes that cost marks
Students lose points by describing modeling as typing formulas, by listing best practices without explaining what problem each solves or by ignoring auditing. Others describe a model so general that it could fit any business. Start from the question the model answers. Explain how each part of the structure helps someone other than the author check the work. Give one example for each practice. Cite evidence that errors are common and costly. Keep the case consistent so you can reuse it in later assignments. No add-in replaces structure; keeping inputs, calculations and outputs apart does most of the work. A free first sample on your own IBF-5070 Module 1 question is available on request.
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IBF 5070 Module 1 questions, answered
Where can I find a free IBF 5070 Module 1 sample paper?
Assembling a 60 MW solar model, from sheet layout to an audit plan, is set out above.
What are the main parts of a financial model?
Inputs, a timeline, calculations, outputs and checks, kept on separate sheets or in separate blocks.
Why should numbers not be typed inside formulas?
Because hidden numbers cannot be found or changed easily, and they make the model hard to audit.
What is a flag in a financial model?
A value of one or zero on the timeline that switches an item on or off, such as operations starting or a contract ending.
What textbook does IBF-5070 use?
Bodmer's Corporate and Project Finance Modeling: Theory and Practice, published by Wiley in 2015.