Juhi Bhandari
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    5 min read·Project·Project

    BioScan Financial Investment Analysis

    Built a full financial model to evaluate a $24M capital investment decision using NPV, IRR, free cash flow analysis, and risk assessment across five value drivers.

    Team: BioScanTools: Excel
    $1.78M
    NPV
    12.92%
    IRR
    $24M
    Investment

    TL;DR

    • Problem: Leadership needed a defensible financial recommendation on whether to greenlight a $24M investment in BioScan.
    • Decision: Build a rigorous FCF model accounting for sunk costs, opportunity costs, cannibalization, and carbon pricing to arrive at a clear recommendation.
    • Result: Positive NPV of $1.78M and IRR of 12.92% exceeding the 10% hurdle rate. Recommendation: proceed.

    Context

    BioScan was a new product requiring a $24M capital commitment. Leadership needed more than a gut call. They needed a structured financial model that accounted for every relevant cost and risk before making a final investment decision.

    Problem

    Six cost items needed to be evaluated for inclusion in free cash flows - sunk costs, contingencies, shared services, lease income loss, cannibalization, and carbon pricing. Each required a different treatment and clear justification for business leaders who are not finance experts.

    What I Did

    Built the complete FCF model in Excel. Evaluated each cost item systematically - excluded sunk costs and contingencies, included G&A charges, opportunity cost of lease income at $137,500 annually, cannibalization losses of $800K, $400K, and $200K across years one through three, and rising internal carbon price starting at $10,000. Ranked five financial and non-financial investment considerations in order of importance. Advised on sensitivity analysis, scenario analysis, and break-even analysis to stress test assumptions. Identified five key value drivers: sales volume, pricing strategy, manufacturing costs, CAPEX and depreciation, and market demand.

    Results

    Delivered a complete financial model and investment memo recommending proceeding with BioScan. NPV of $1,786,676 confirms positive value creation. IRR of 12.92% exceeds the 10% hurdle rate. Even with cannibalization and opportunity costs included, the project remains profitable under conservative assumptions.

    Learnings

    Financial modeling is a product skill. The model is only as good as your assumptions, and the recommendation is only as good as your ability to communicate it to people who are not finance experts.

    Artifacts

    Excel financial model, FCF analysis, sensitivity and scenario framework, investment recommendation memo.