| Course | MGT 418 Evaluating New Business Opportunities (MGT/418) |
|---|---|
| Week | 4 |
| Paper type | Risk and investor analysis |
| Length | about 1,065 words, 4 double-spaced pages plus title page and references |
| Format | APA 7 student paper |
| School | University of Phoenix |
| Program | BS in Business |
| Updated | October 2026 |
Free sample paper for MGT 418 Week 4
What Could Go Wrong With Portable Storage, and What Would a Lender or Investor Want? Risk and Funding Considerations for Summit Ridge
[Student Name]
University of Phoenix
MGT/418: Evaluating New Business Opportunities
Week 4 Assignment
[Instructor Name]
[Date]
Summit Ridge Equipment Rental and all figures are composites written for a model paper.
Summit Ridge Equipment Rental, the composite Boise company, found in Week 3 that its portable storage venture would earn an NPV of about $337,000 at a 10 percent required return, with an IRR of about 12.5 percent. The result is positive but thin: 20 percent lower demand would make NPV slightly negative, while refurbished containers would raise IRR to about 16 percent. The owners need to understand the risks and how to fund the venture without endangering the rental business their parents built. When a project's return is only modestly above the hurdle, the way it is managed and funded matters as much as the forecast itself. This paper assesses the risks and funding options.
Categories of Risk
Risks fall into market, competitive, operational, financial, legal and people categories. Each was rated on a five-point scale for likelihood and impact, using the scenario results from Week 3 and interviews with the yard managers and controller.
Market Risk: Weaker Demand
Demand below plan is the largest risk, rated likelihood 3 and impact 5. A construction slowdown would hit the contractor segment hardest. The response is to stage investment, start with contractors who have already rented in the Week 2 field test and track rentals monthly.
Competitive Risk: Price Cuts
National brands could cut prices in the Treasure Valley, rated likelihood 3 and impact 4. The response is to compete on delivery speed and outlying-town coverage rather than price, offer contractors longer-term rates and avoid matching every cut.
Operational Risk: Theft, Damage and Accidents
Containers on job sites can be damaged or broken into, and delivery trucks can cause accidents, rated likelihood 3 and impact 3. Responses include heavy-duty locks, damage waivers sold to customers, driver training and commercial auto and inland marine insurance.
Operational Risk: Strain on Shared Resources
Container deliveries compete with equipment deliveries for drivers and trucks in the spring and summer. Rated likelihood 4 and impact 3, this is addressed by dedicated storage trucks and scheduling container deliveries early in the day.
Financial Risk: Container Costs
Steel container prices can rise with steel and shipping costs, rated likelihood 3 and impact 3. Buying refurbished containers for part of the fleet and locking in prices for the first year reduce this risk.
Legal and Regulatory Risk
Some cities limit how long containers can stay on residential streets or driveways. Rated likelihood 2 and impact 2, this is managed by checking local codes and including placement guidance in rental agreements.
People Risk
The venture depends on a storage coordinator and the owners' attention. If the owners are distracted from the core rental business, both could suffer. A dedicated coordinator and monthly reviews address this.
Bias in Rating Risks
Risk ratings are judgments, and the people closest to a project tend to rate its risks lower. Kahneman and Lovallo (1993) described how planners focus on the specifics of their own project and underweight the experience of similar ventures, producing bold forecasts alongside timid choices elsewhere. To counter this, the controller and an outside adviser who was not involved in the proposal rated the risks independently. Their ratings for demand risk were higher than the owners', and the register uses the higher figures.
Concentration Risk
If contractors become most of the storage revenue, a construction slowdown would hit both the storage venture and the core rental business at the same time, since contractors also rent equipment. This correlation means the venture adds less diversification than it appears. Building the homeowner and renovation segments over time reduces this risk, and the plan sets a goal of at least 40 percent of rentals from non-contractor customers by year three.
The Risk Register
The register lists each risk with ratings, responses and an owner, from the general manager for demand and pricing to the safety manager for accidents. High-likelihood, high-impact risks, weaker demand and price cuts, receive the most attention.
Staging as a Real Option
Dixit and Pindyck (1994) showed that when investments are irreversible and outcomes uncertain, the ability to wait or invest in stages has value. Buying containers only as rentals grow, rather than buying the full fleet at once, gives Summit Ridge the option to stop if demand disappoints. If the first 141 containers are not 75 percent rented by month nine, further purchases pause.
What a Bank Wants
A bank lending against the venture would look at Summit Ridge's existing cash flow and balance sheet, the owners' personal guarantees, collateral and the projections. It would likely lend at about 8 to 9 percent and require covenants on debt levels.
What an Equipment Lender Wants
Equipment lenders finance containers and trucks using the equipment as collateral. They care about the resale value of the assets and the borrower's payment history. Financing can be drawn in stages as containers are bought, matching the real option.
What an Equity Investor Wants
Gompers et al. (2020) surveyed venture capitalists and found that the management team was the most important factor in their decisions, followed by business model and market. A minority investor in a regional storage venture would want a meaningful ownership share, influence over decisions and a path to cash out, such as a sale of the business. For a modest-return venture, an equity investor's expected return would likely exceed what the project can deliver.
Comparing Funding Sources
Company cash costs nothing in interest but reduces the rental business's cushion. Bank debt is moderately priced but adds covenants and guarantees. Equipment financing matches staged purchases and uses the assets as security. Equity avoids repayment but gives up ownership and control and is expensive for a project with an IRR near 12 percent.
Recommended Funding Approach
Summit Ridge should fund the trucks and yard work, about $820,000, from company cash and finance containers through a staged equipment line as rentals grow. No outside equity is needed. This keeps the rental business's balance sheet sound and ties borrowing to actual demand.
Conclusion
The portable storage venture's main risks are weaker demand and price competition, with operational, financial, legal and people risks manageable through specific responses. Staging investment creates a valuable option to stop if demand disappoints. Equipment financing plus company cash fits the venture's size and return better than outside equity, setting up the final decision in Week 5.
References
Dixit, A. K., & Pindyck, R. S. (1994). Investment under uncertainty. Princeton University Press.
Gompers, P. A., Gornall, W., Kaplan, S. N., & Strebulaev, I. A. (2020). How do venture capitalists make decisions? Journal of Financial Economics, 135(1), 169-190. https://doi.org/10.1016/j.jfineco.2019.06.011
Kahneman, D., & Lovallo, D. (1993). Timid choices and bold forecasts: A cognitive perspective on risk taking. Management Science, 39(1), 17-31. https://doi.org/10.1287/mnsc.39.1.17
What the MGT 418 Week 4 instructions ask
The fourth MGT 418 assignment typically asks students to assess the risks of a new opportunity and the considerations of potential investors or lenders. Common requirements include identifying market, operational, financial, competitive, legal and people risks; rating them by likelihood and impact; proposing ways to reduce or transfer them; explaining what investors and lenders look for; comparing funding sources; and recommending how to finance the opportunity. Use the earlier market and financial analysis, show a risk matrix or register, tie each response to the numbers from earlier weeks and support claims with APA citations. Name an owner for every major risk so the register can be used after the paper is written.
How this MGT 418 Week 4 example is built
A storage venture whose return depends on demand and container cost carries risks a family company must manage before committing $3 million, and the paper builds a register of them. Risks include weaker demand, price cuts by national brands, rising container prices, theft and damage, delivery accidents and strain on drivers. Each is rated and given a response. Staged investment, buying containers only as rentals grow, acts as a real option that limits losses. The paper compares a bank loan, equipment financing and a minority investor, explaining what each wants. It recommends staged equipment financing plus company cash, without outside equity, with a utilization trigger for pausing purchases.
MGT 418 Week 4 grading rubric: where the points go
Strong risk papers identify specific risks across several categories, rate them sensibly and link responses to the venture's financial results. Instructors credit a clear risk register, responses that reduce, transfer or accept each risk, recognition that staging investment can limit losses and an informed view of what lenders and investors require. Comparing funding sources on cost, control and risk shows judgment. A recommendation that protects the existing business demonstrates understanding of the owners' position. Setting a clear trigger for pausing investment, such as a utilization threshold, shows that risk management has been built into the plan rather than described beside it. Tables and APA citations complete the analysis. Connecting risk responses back to scenario results from the previous week strengthens the argument.
MGT 418 Week 4 help: mistakes to avoid
Students often list risks without rating them or saying what to do. Rate likelihood and impact and assign responses. Another gap is treating risk as only financial; include operational, legal and people risks. Students also describe investors generically. Explain what a bank, an equipment lender and an equity investor each want. Avoid recommending equity for a venture that does not need it; giving up ownership is costly. Link responses to the numbers. Consider staging investment. Finally, explain how the funding choice protects or exposes the existing business, since that is the owners' main concern. Name who will watch each risk once the venture starts.
Related MGT 418 sample papers
Other MGT 418 week samples
- MGT 418 Week 1: Screening New Business Opportunities
- MGT 418 Week 2: Analyzing Markets and Competitors
- MGT 418 Week 3: Financial Projections and ROI
- MGT 418 Week 5: Go or No-Go Recommendation
More BS in Business sample papers
- MGT 362 Week 4: Stakeholders and Change Communication
- MGT 401 Week 4: Drafting the Business Plan
- MGT 434 Week 4: Privacy, Testing and Monitoring
- MGT 445 Week 4: Conflict Management
MGT 418 Week 4 questions, answered
What does MGT 418 Week 4 usually cover?
It usually covers assessing risks of a new opportunity, rating them, planning responses and considering what lenders and investors require, ending with a recommended funding approach.
Where can I find a free MGT 418 Week 4 sample paper?
A full risk register and funding analysis for a portable storage venture, with notes on each response, appears above. Students who send their MGT 418 prompt can receive a no-cost starting draft.
What is a risk register?
A table listing each risk, its likelihood, its impact, the response planned and the person responsible, used to track and manage risks over time.
What is a real option in investment?
A choice a company keeps open, such as pausing, growing or ending a project later, which has value when outcomes are uncertain and investment can be staged.
What do investors look for in a new venture?
Investors typically look at the management team, the market opportunity, the business model, expected returns, risks and how they will eventually earn their money back.
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