Financial Management: Long Term Finance and Investment Appraisal Techniques

Financial
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
QUESTION 2...................................................................................................................................1
(a) Long term finance: Equity finance........................................................................................1
(c) Evaluate the benefits of scrip divided in context of shareholders or companies...................4
QUESTION 3...................................................................................................................................5
a. Investment appraisal technique...............................................................................................5
b. Critical evaluation of investment appraisal techniques with the help of its benefits &
drawbacks....................................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES .............................................................................................................................12

INTRODUCTION
In the current business atmosphere, it is recognized as financial management to handle
and monitor each financial event over a specified period of time. There's a necessity to monitor
and allocate fiscal resources across every form of enterprise in attempt to perform out the
intended operation in most efficient way to enhance the overall profits. This is categorized as a
sort of tactics best linked to financial practices, planning, leadership and strategic planning. It
emphasizes simply on percentage growth and obligations as it makes it possible to efficiently
manage the strategic plan. Furthermore, all forms of businesses require this to manage the
funding and financial resources (Shapiro and Hanouna, 2019).
Key strategic decisions are being made in this study to render critically important
decisions, crucial comprehension of specific analytical skills are discussed to make decisions at
international scale. Furthermore, constraints of the present state regarding financial theories are
developed which make much better business decisions.
MAIN BODY
QUESTION 2
(a) Long term finance: Equity finance.
(A) Issue of Right share: Rights issue implies to offering of rights to company's current
shareholders which allows them to purchase added securities directly from corporation at a
discounted rate instead of buy shares on secondary market. The total of extra securities to be
purchased relies on the shareholders ' existing holdings. Rights issue offers present shareholders
preferential attention where they have the legal ability like right (not the ethical responsibility) to
buy shares at cheaper price before or on a specific date (Brigham and Houston, 2012). Here in
this context Lexbel plc wants to issue right shares among existing shareholders with aim to fulfil
their funding requirements. In this context following are calculations to assess the number of
right share that company can issue based on their existing profits and capital structure, as
follows:
Lexbel plc wishes to rise: 180000GBP
Current ex-dividend market-price of Lexbel plc: 1.90GBP
3 assorted rights-issue prices recommended by corporation's finance director: GBP1.80,
GBP1.60 and GBP1.40
1