Groupe Ariel S.A.

- International Project Valuation Assignment

Complete the following questions from the Groupe Ariel S.A. case. Show all your work
in an Excel workbook titled YourName_GASA. Build your Excel workbook in
accordance with the following criteria:
Name everything (all data cells, graphs, tables, worksheets should be named).
Put all the variables that are important (value drivers) at the top of your
spreadsheet, never use a number where a formula will also work, avoid the use of
blank columns to accommodate cell spillovers, align everything, and keep
related data close.
Do not use more than two fonts, keep it to 3-5 colors white, gray, and 1 3
accents, Pre-format every page and check for happy printing.
When done turn off gridlines, column and row headers (A, B, C...1, 2, 3), and
chart borders.

The assignment equals 100 points and represents 20% of your overall GBA 7241 grade.
The assignments rubric can be found at the end of this document. This is an individual
assignment.

1) Assume 3% inflation going forward in France. Based on this assumption and the
information contained in the case, what hurdle (discount or cost of capital) rate, in
pesos, would you use to discount the cash flows from the project? Show your
calculations and assumptions. (30 points)
2) Compute the project cash flows in pesos for years 0 through 10 and calculate the
NPV in pesos. Calculate the IRR of the project. Show your calculations and
assumptions in detail. Should the project be accepted or rejected? (60 points)
3) Convert the Peso NPV to Euros at the June 23, 2008 spot exchange rate. Show
your calculations. (10 points)

Grading Rubric

Question 1

Excellent Good Adequate Deficient

Correctly calculated Correctly calculated Incorrectly calculated Incorrectly calculated
the hurdle (discount) the hurdle (discount) the hurdle (discount) the hurdle (discount)
rate using the rate with minimal rate with minimal rate with major
appropriate errors in errors in errors in
assumptions and assumptions and assumptions and assumptions and
concepts covered in concepts covered in concepts covered in concepts covered in
the text and in class. the text and in class. the text and in class. the text and in class.

20 points 18-19 points 16-17 points 0-15 points

Question 2

Excellent Good Adequate Deficient

Correctly calculated Minimal errors in Minimal errors in Major errors in
the projects yearly calculating the calculating the calculating the
cash flows in Pesos project's yearly cash project's yearly cash project's yearly cash
as well as the flows in Pesos. NPV flows in Pesos and flows in Pesos and
project's NPV and and IRR are either (1) NPV and (1) NPV and IRR are
IRR, leading to the calculated correctly IRR are calculated calculated incorrectly
correct accept/ based on the cash incorrectly based on based on the cash
reject decision flows calculated. the cash flows flows calculated (2)
Reached the correct calculated or (2) Reached incorrect
accept/reject Reached incorrect accept/reject
decision accept/reject decision
decision
60 points 54-59 points 48-54 points 0-47 points

Question 3

Excellent Good Adequate Deficient

Correctly converted N/A N/A Incorrectly converted
the Peso NPV to the Peso NPV to
Euros at the spot Euros at the spot
exchange rate exchange rate

10 points 0 points

Excel Model

Excellent Good Adequate Deficient

Overall, the excel Overall, the excel Overall, the excel Overall the excel
model is a model is a model is model makes a poor
professional looking professional looking unremarkable impression. It is
document that is document that is although it may be a unorganized and
logical and easy to logical and easy to logical and easy to difficult to follow. It
follow. It would follow. It would follow. Little contains many
make an outstanding make a good consideration has departures from the
impression and has impression. It has a been given to its established criteria
been built according few minor presentation value.
to established departures from the It has a few minor
criteria established criteria departures from the
established criteria

10 9 8 1-7