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ACC00152 Business Finance Assignment

   

Added on  2021-05-27

7 Pages962 Words63 Views
Finance
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ACC00152 Business Finance Assignment 1: Memo to Management
ACC00152 Business Finance Assignment_1

TABLE OF CONTENTSPart A: Memo.............................................................................................................................3Decision..................................................................................................................................3Part B: Supportive analysis........................................................................................................4NPV of Option: A: producing and selling the product by SSF..............................................4Net present value of Option B where license is to be given to Aero Jett Ltd........................6Net present value of Option C in which patent right is sold to Aero Jett Ltd........................6
ACC00152 Business Finance Assignment_2

PART A: MEMOTo Savanah Harley (CFO)CC: Directors of Space sky Flight (SSF)Subject: Evaluation of available options of production, licensing or patent to recommendsuitable option for maximisation of profitsFrom: Finance departmentDate: 10-may-2018Analysis of available three projects has been done by considering method net present value.this methods considers the fundamental concept that the money in future is less worthy thanthe money in hand today, by considering this the discount on cash flows are done by othertime of capital costs. The method also depicts that if or if not to create value for investment,and in what quantity.Further, the NPV measure considers the capital cost and the inborn riskwhile making proposed plan for future. This will help in creating less impact in the NPV thanmore expected cash flows taking place in past times.Decision matrixStatement showing Evaluation of the 3 alternativesParticularsAmountANPV as Per Option IProduction $58.66 millionBNPV as Per Option IIProduct licensing$72.43 millionCNPV as Per Option IIIPatent rights$72.80 millionDecisionBy considering the analysis of all three options, managerial authorities are recommended toselection option C where instead of production is to be done by company, managers canPatent rights provide to Aero Jett Ltd company. However, by giving patent right to Aero JettLtd company will create competitor for themselves which can affect their future profitability.
ACC00152 Business Finance Assignment_3

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