NOVA School of Business and Economics

Case Study Corporate Finance Undergraduate Programs in Management and Economics 2010/2011 (Spring Semester)
Prof. Miguel Ferreira Dr. João Filipe

CIMSPA
1st QUESTION

[GROUP 45]
Hélia Lopes, 9056 | Jean Rafael, 10402 | Marta Costa, 9475 Marta Soares, 8624 | Miguel Melo, 8878

EXECUTIVE SUMARY: The present report will study the feasibility of an investment opportunity by Cimspa consisting on the expansion of its production process to Angola. In the following analysis we used forecasts previously obtained. Additional relevant information on market data, taxes and law was taken from accurate records of OANDA, IMF, Deloitte and a publication of the Angolan Labor Policy, but all references are properly stated forward.

1DATA

TREATMENT AND REMARKS:

° All data was converted to Euro’s as the final results should come in that unit. For this purpose we used exchange rates from September 30th available on OANDA website2, obtaining an USD/EURO Exchange rate of 0,7247 and an AKZ/EURO Exchange rate of 0,008. Furthermore, from now on all the values presented in this report will be expressed in Euro’s, according with the above FOREX rates; unless indicated otherwise. ° We Accessed the PIB's growth rate and inflation forecasts by the IMF Angola Report No. 11/513. For inflation the values were deduced from the consumer price index (end of period) because later on when we refer to any period we will be referring to the term of the same period, for example when discounting the Free Cash Flow (FCF) for each given period with the appropriate annual discount rate.
2010 Expected inflation Expected real GDP growth 2011 10,80% 8,10% 2012 11,20% 9,20% 2013 7,00% 8,60% 2014 6,00% 8,30% 2015 6,00% 8,20%

° The effect of the business growth was estimated through production and the number of employees by adding successively from year