CAPITAL EXPANSION FINANCIAL MODEL FOR 3 OPTIONS - 5 YEAR PROJECTIONS

I was tasked with making a recommendation for a Multi-million dollar sporting arena. The choices were refresh a luxury club, expand it, or make it into an ultra-premium space. The following instructions were given

A current space is ending its useful life and needs to be addressed. The CLUB is currently evaluating 3 possible business models for a luxury amenity. The potential scenarios are below along with some assumptions. Do a financial model and analysis, include any clarifying questions, and make an executive recommendation presentation on which concept would be best for the arena to invest in.

1. Current Club Concept
a. Capital Investment needed $1 Million to refresh

2. Expansion of Current Premium Space into this space to create one larger space. The space is restaurant style and operates like one as everything is paid-for purchase.
a. Capital Investment needed $2 Million

3. Ultra-Premium All-Inclusive Space
a. Capital Investment of $5 Million

I created a full Financial Model for 5 years for all 3 options (with additional assumptions from the company and my own) using financial valuation methods such as;
1. Cash Flow
2. Net Present Value
3.Internal Rate of return
4. Payback Period

Recommendation - I recommended refreshing the current club space, , with a total projected cash flow of $2.4 M and payback period in 2 years & 4 months, 44% IRR and $1.4m @10%.

This would have been the best option compared to the other 2 (highlighted in the PPT)