| Course | GF599 Graduate Capstone in Finance |
|---|---|
| Unit | Unit 1 |
| Paper type | Capstone project proposal |
| Length | About 760 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Finance |
| Updated | October 2026 |
Free sample paper for GF599 Unit 1
Sell the Buildings or Borrow Against Them: A Unit 1 Capstone Project Proposal for a Tire and Auto Service Chain
[Student Name]
Purdue University Global
GF599: Graduate Capstone in Finance
Unit 1 Project Proposal
[Instructor Name]
[Date]
Tollbrook Tire and Service, its people, its figures and the investor's offer are composite and illustrative; the sources cited are real.
The Question
Should Tollbrook Tire and Service accept a net-lease investor's offer to buy its seven owned store buildings for $11,200,000 and lease them back, or keep the buildings and raise the same kind of money with a mortgage?
The Offer
The investor's letter of intent, received in August, proposes:
1. Price: $11,200,000 for all seven sites.
2. Lease: fifteen years, absolute net, so Tollbrook pays taxes, insurance and all repairs.
3. Rent: $756,000 in the first year, rising 2 percent a year.
4. Renewals: four five-year options at market rent.
The first-year rent divided by the price gives a capitalization rate of 6.75 percent, the yield the investor expects to earn.
The Organization
Tollbrook runs eleven stores, seven in buildings it owns and four in leased space. Revenue last year was about $38,500,000, with EBITDA of $4,620,000. The chain has drawn $6,400,000 on a $9,000,000 revolving line of credit at a floating rate near 7.1 percent, mostly to fund two new stores and a parts warehouse. The owner-president wants to reduce that floating-rate balance before rates or the bank's terms change, and the investor's letter arrived just as she began talking with lenders.
The Decision Criterion
The project will recommend whichever route costs the chain less after tax over the full fifteen-year lease term. That comparison must count four things a quick reading leaves out: the tax due on selling, the depreciation deductions Tollbrook would give up, the rising rent and the value of the buildings at the end of the term, which the chain keeps only if it does not sell.
A sale-leaseback is a way of borrowing against buildings by selling them, so the fair comparison is not rent against interest but the full after-tax cost of each way of raising the same money.
This framing follows a long line of work on leases. A lease that commits the lessee to fixed payments displaces debt and should be valued as a borrowing, discounted at the lessee's after-tax cost of secured debt (Myers et al., 1976). Leasing can also stretch a firm's debt capacity, because a lessor who can repossess an asset may lend against it more readily than a bank (Eisfeldt & Rampini, 2009).
Scope
Inside the project: the seven owned buildings, the investor's offer, a mortgage on some or all of those buildings, the effect of each route on the credit agreement's covenants, and the after-tax cost of each over fifteen years.
Outside the project:
1. The four leased stores, whose leases are not affected.
2. Store operations, pricing and staffing.
3. Whether to open or close stores.
4. Selling the whole company.
5. Equity from new owners.
Each excluded topic matters to the business, but none changes how the seven buildings should be financed. Including them would turn a decision the owner can make this year into a strategic review that would not finish in one term.
Why the Question Is Worth a Term
The decision is large relative to the chain: the offer equals about 2.4 times a year's EBITDA. It is also hard to reverse. Once the buildings are sold, Tollbrook cannot buy them back at the same price, and a fifteen-year lease commits the chain to a fixed obligation through two business cycles. Studies of firms that announce sale-leasebacks have found the market response depends on why the firm sells and what it does with the cash, which suggests the answer is specific to each firm rather than general (Rutherford, 1990).
What the Analysis Needs First
Three documents must arrive before the comparison can begin:
1. The fixed-asset register, to establish the tax basis of land and buildings.
2. The credit agreement, to define the covenants each route must respect.
3. A written mortgage indication from the chain's bank, to give the borrowing route a real rate.
The owner-president has agreed to release all three, and the feasibility memo in Unit 2 will confirm their status.
Deliverable
The term ends with a report to the owner-president and the chief financial officer that recommends one route, shows the after-tax cost of each, states the conditions that would reverse the answer and lays out the steps to carry out the decision.
References
Eisfeldt, A. L., & Rampini, A. A. (2009). Leasing, ability to repossess, and debt capacity. The Review of Financial Studies, 22(4), 1621-1657. https://doi.org/10.1093/rfs/hhn026
Myers, S. C., Dill, D. A., & Bautista, A. J. (1976). Valuation of financial lease contracts. The Journal of Finance, 31(3), 799-819. https://doi.org/10.1111/j.1540-6261.1976.tb01924.x
Rutherford, R. C. (1990). Empirical evidence on shareholder value and the sale-leaseback of corporate real estate. Real Estate Economics, 18(4), 522-529. https://doi.org/10.1111/1540-6229.00535
GF599 Unit 1 instructions, in plain terms
GF599's first unit asks for a proposal that names an organization, a decision and the evidence needed to make it. State the question in a single sentence that has a yes or no answer, or a choice between named alternatives. Describe the organization briefly with the figures that bear on the decision, such as revenue, earnings and current debt. Set a decision criterion before any analysis, so the result cannot be bent to fit a preferred answer. Draw a clear scope, listing what is inside and what is deliberately left out, with one sentence justifying every topic you set aside. Explain why the question deserves a term of work: its size, how hard it is to reverse and why a general rule will not answer it. Close with the documents the analysis cannot begin without and the deliverable the term will produce. Cite the finance research behind your framing in APA 7.
How this GF599 Unit 1 example is built
The proposal opens with its one-sentence question, then sets out the investor's four terms and the 6.75 percent cap rate they imply. A short organization profile gives Tollbrook's $38.5 million of revenue, $4.62 million of EBITDA and $6.4 million drawn on a $9 million floating line. The decision criterion counts tax on the sale, lost depreciation, rising rent and the buildings' value at the end of the term, and the highlighted sentence frames a sale-leaseback as borrowing. Myers, Dill and Bautista supply the lease-as-debt view and Eisfeldt and Rampini the debt-capacity argument. The scope section lists five exclusions and explains why each would derail the term. A paragraph on stakes notes the offer equals 2.4 years of EBITDA and cites Rutherford on mixed market reactions. Three required documents and the final deliverable close the proposal.
Where the points sit in the GF599 Unit 1 rubric
The rubric for this GF599 proposal weighs the question and its scope most heavily. A question that is too broad, such as whether the chain should change its strategy, cannot be answered in a term, and instructors look for one decision with named alternatives. The criterion earns credit when it is set in advance and states what will be counted, because a vague goal like finding the best option leaves room to rationalize. Scope is graded on whether exclusions are justified, not merely listed. Credit also goes to evidence that the question matters to the organization and cannot be settled by a rule of thumb. Naming the documents needed shows the student has thought about feasibility before Unit 2. Research on lease valuation and on sale-leaseback outcomes, cited in APA 7, demonstrates that the framing draws on the field rather than intuition.
GF599 Unit 1 help: mistakes that cost points
Weak GF599 Unit 1 proposals ask questions with no decision at the end, such as describing a company's financial health. Others propose several related questions and promise to answer them all, which leaves no time for depth. A common mistake is choosing a criterion after looking at the numbers, or leaving it out entirely. Scope sections often list exclusions without reasons, so the instructor cannot tell whether the boundary was chosen or accidental. Some proposals describe the organization at length but never give the figures that bear on the decision. Others forget to say what documents are needed, then discover in Unit 5 that a key input is unavailable. Before you submit, check that your question fits in one sentence, that your criterion would pick a winner without further judgment, and that every topic you exclude carries a sentence explaining why it is outside the term.
Get a GF599 Unit 1 example written to your instructions
Tell us the organization and the decision it faces, then attach the proposal prompt and rubric from your GF599 section. What comes back states that decision in one sentence, commits to a single criterion, fences the scope and names who holds each figure. Your first custom sample carries no charge and typically arrives in 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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GF599 Unit 1 questions, answered
Is Tollbrook Tire and Service a real company?
No. Tollbrook is invented, and its store counts, debt, lease terms and tax basis were set so that every figure reconciles with every other, as an operator's books would. Your own proposal will name your employer or an organization whose figures you can obtain. What the page demonstrates is the shape of a scoped financing question, never facts about a business.
Why not simply value the whole company?
Because a valuation of the chain answers a question nobody asked. The decision on the table concerns seven buildings and one lease offer, and it can be settled with the documents listed. A company valuation would need forecasts for every store and would still leave the sale-leaseback question open when the term ended.
What if my organization has no offer like this one?
Many projects start from a decision management is already weighing, such as a refinancing, a large equipment purchase or a change in customer payment terms. If none exists, a question can be built from filings or internal plans, provided the alternatives are real and priced. Instructors tend to approve a narrower version faster than an ambitious one.
Where can I find a free GF599 Unit 1 sample paper?
This page carries a full GF599 Unit 1 capstone project proposal on a tire chain's offer to sell and lease back seven buildings, with the question, the offer, a decision criterion, a justified scope and APA 7 references.
Why treat a sale-leaseback as borrowing in GF599 Unit 1?
Because the chain receives cash today and commits to fixed, rising payments for fifteen years, just as it would with a loan, except it also gives up the buildings. Comparing it with a mortgage on the same buildings measures which way of raising money costs less.