AST 205 Final Exam Fall 2003

AST 205 Final Exam Fall 2003

AST 205 Final Exam Spring 2006Due: Friday May 5 11:00 a.m. or before*

1. For this semester’s exam you and your FBO partner are to read the given case hand out and accomplish the following (Be sure to return the handout with your exam):

  1. Point out the potential weaknesses in Benjamin’s plan in a paragraph. You should outline at least three points and explain why they are weaknesses
  2. Develop your own plan to return AirVentures to profitability. Be creative but state your assumptions as you go (ie. We would assume that all the old customers would return by… or Fuel could be sold at… etc.)
  3. Your final product to me should be a 2 – 3 page plan (at least 3 pages if you include several tables and graphs), 12 point font, and, in addition, at least one page outlining the weaknesses in Benjamin’s plan. The plan should be typed and printed on a laser or laser-quality printer. Be sure to proof-read and keep the margins to 1” all around. A title page is also helpful.

You may find it helpful to read and refer to chapter 4 in your text. I do not expect any kind of detailed financial analysis but you will need to talk in terms of how much money you anticipate bringing in and how. You should also mention how you will control costs in order to return to profitability as soon as possible.

Be sure to talk about:

How you will organize the business, what will be your profit centers, who will work for you, how much will the profit center generate? Ie. We expect to have two 172’s for rent and expect them to fly 40 hours per month each. Rental price will be $85 per hour, hourly expenses will be $48 for an hourly profit margin of $37 (hypothetical).

How will you market to the public- strategies methods etc.

How much start up capital will you need (money to get started- buying airplanes, money to pay the bills while you return to profitability etc.)

You will be graded on your creativity and justification, not on any right or wrong answers. I will be looking to see if your plan has taken a somewhat realistic look at the situation. You do not need to be overly concerned about your profit and expense figures being exactly accurate, but again, state your assumptions.

Helpful terms:

ROI- “Return on Investment”- found by dividing the income after taxes by the total assets in the business. For example if an aircraft mechanic made $80K last year after expenses and has $100K invested in equipment and facilities this is an ROI of .8 (quite nice because if he would have placed the same $100K in the bank he would have been doing well to get an 8% annual return [.08] on that investment).

Payback period- How much time it takes you to re-coupe your initial investment in a business. Ie. If your business profits $10K per year and you invested $100K in the business, the payback period is 10 years (100/10).

*Contact me with any questions you have as you go- email is best as I can more easily check this when I am not in. or