ACCOUNTING FOR MANAGERS.

Running head: ACCOUNTING FOR MANAGERS
Accounting for Managers
Name of the Student:
Name of the University:
Author’s Note:

1ACCOUNTING FOR MANAGERS
Table of Contents
Part A.........................................................................................................................................2
A) Payback Period for the Project....................................................................................2
B) Net Present Value of the Project.................................................................................2
C) Internal Rate of Return of the Project..........................................................................2
D) Analysis of Project from the viewpoint of Benetton Plc.............................................3
E) Strength and Weakness of the Investment Appraisal Techniques Applied in the
evaluation of the project.........................................................................................................4
Part B..........................................................................................................................................7
A) Costs and Cost Behaviour Impact on the preparation of Organisation Budget...........7
B) Application of Break-even Analysis in the context of decision making.....................8
Reference..................................................................................................................................12

2ACCOUNTING FOR MANAGERS
Part A
A) Payback Period for the Project
The payback period is the point of time where the initial amount invested by the
company would be recovered in the due course of the project. The payback period is an
important assessment tool applied by the management of the company in the context of
decision-making and the recovery of the initial investment incurred by the company. The
payback period for the Benetton Plc. project was calculated by incorporating the amount
to be recovered by the company in the due course of time. The payback period for the
project was around 1.26 Years which says that the company would be able to recover the
same amount in this period of time.
B) Net Present Value of the Project
The net present value of the project shows the amount of profitability generated by the
company by investing in a project. The net present value is the value created for the
shareholders of the company from the investment in the project. The net present value
generated by the project was around £141,894 (Banerjee 2015). The Net Present value
generated from the project was around £141,894, which shows that the wealth of the
shareholders will be created by an amount equal to £141,894 (Magni and Martin 2017).
C) Internal Rate of Return of the Project
The Internal rate of return generated from the project shows the profitability
measurement in terms of the percentage return created by the investors. The internal rate
of return was calculated after incorporating the initial investment to be done by the
company and the corresponding cash flows to be received by the company from the
project. The internal rate of return from the project was around 43% (Liu et al. 2017). The

3ACCOUNTING FOR MANAGERS
internal rate of return generated from the project was also quite at an interesting level
which was around 43% (Nwogugu 2016).
D) Analysis of Project from the viewpoint of Benetton Plc.
The project investment done by the Benetton plc. Should be analysed by the company
in the context of various business factors and certain other conditions in which the
company operates. The company should evaluate the project based on the return
generated from the project and other investment assessment tool in order to assess the
financial viability of the project. The application of the net present value will help the
company asses the profitability from the project (Sultana 2015). It is important for the
company to invest in projects that is having a sound profitability and sustainable cash
flows so that the project can create wealth for the shareholders of the company.
Companies should adhere to the various factors under which the profitability of the
company would be assessed and must result in the creation of the shareholder’s wealth.
The payback period for the project shows the net cash inflow earned by the company in
respect to the investment done by the company (Alkhamis et al. 2017). The payback
period for the project was around 1.26 years which means that the initial invested amount
of £165,000 would be recovered in the 1.26 years of time frame by the company from the
project. The Net Present value generated from the project was around £141894, which
shows that the wealth of the shareholders will be created by an amount equal to £141894
(Hoque et al. 2016). The internal rate of return generated from the project was also quite
at an interesting level which was around 43%. The gross cash flows was calculated using
the net lease receivable amount on a yearly basis and the sales of the asset at the end of
five year was taken into consideration for the project (Shivaani, Jain and Yadav 2017).
The cost of equity taken into consideration for the analysis of the project was around 12%
which shows the required rate of return from the equity shareholders of the company. The