Calculations: Managing Financial Resources and Investment Decisions

This project report focuses on Zylla Limited and their need for financial resources to expand their industry by acquiring new ferries. It discusses short-term and long-term sources of funds, risk assessment techniques, and the feasibility of purchasing and running a new ferry. The report concludes that it is advantageous for the business to buy a new boat.

CALCULATIONS

Contents
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
CONCLUSION...........................................................................................................................................6
REFERENCES............................................................................................................................................7

INTRODUCTION
This is important for companies to manage their financial resources and choose
investments effectively. That is because the management of these sorts of activities is an integral
aspect (Fanea-Ivanovici, 2018). The project report is focused on Zylla limited that provides the
river crossing services by ferry to satisfy the need for financial aspects. The business wants to
expand its own industry by new ferries in the current time. The study also provides application of
fund valuation approaches in order to take appropriate investment decisions.
MAIN BODY
1. Shorter and lengthy term of source of funds in order to acquire new ferry and for satisfying
requirement of working capital.
There are a number of finance channels, from which businesses obtain capital in the
current business environment. That is dependent on which businesses obtain funds from
which source. Eventually, two forms of funding sources are listed in the following way:
Short term source of finance- This can also be viewed as a form of financial source from
which businesses are eligible to collect funds in less than one year to satisfy a lower cost
obligation. They may, for example, fulfill the working capital obligation of the Zylla
Limited Corporation from way of such a source. There are different sources, such as:
 Bank loan or overdraft - the term bank loan can be described as cash payments by a bank
at lenders ‘cost over a period of time, typically on leverage. Because the bank overdraft is
a type of service where people may also borrow cash, they don't have enough money in
their bank accounts. This is a primary source of quick term for fulfilling the needs for
working capital (Myers and Gallagher, 2017).
 Additional partners- The Company can add new partners to this investment source and
allocate a amount of money to total assets. This may be helpful to satisfy short-term
criteria. They will satisfy their working capital requirements in the Zylla limited
partnership by recruiting new investors.

 Accounts receivable financing- This offers short-term funding for companies to sell their
debt to third parties and meet the immediate cash need. Using this form, the organization
may collect funds to satisfy work capital requirements.
Long term source of finance- This may be interpreted as a form of funding stream from which
businesses may receive more than one year of funds to meet longer expenditures. They can
comply with the obligation to buy new ferry from this source, as in the Zylla limited business.
There are specific sources, such as:
 Leasing- This can be defined as a contract between the lesser (owner of property) and the
loaner (an individual obtaining property) to hire similar properties for a specified period
of time for payment of the rentals. With regard to this company, it can be identified that
they can purchase a new ferry on lease to save their funds.
 Retained earnings- It is a kind of financial source which can be provided without any
expense within the business. Companies may accomplish so by paying distributions on
sales to their owners. They can meet the need to buy a new ferry from this fund source as
in the above-mentioned business (Marshall, McCann and McColgan, 2016).
 Term loan from financial institutions- This is a significant source of financing for
businesses who may obtain financial help from international financial entities such as the
government. As with the above group, by taking loans from banks, they may buy a new
ferry.
2. An overview of different risk assessment techniques and indicating the feasibility of
purchasing and running new ferry using one acceptable investment assessment technique.
There are various approaches to study the specific investment strategies in the modern
age. Here are some of the following techniques:
 Payback period- It can be defined as a technique for measuring the length of time during
the investment costs phase. It is computed by the formula below:
If cash flows are equal:
Payback period = Initial investment / cash flow

When there is unequal cash flow-Payback period = Years before recover + UN-recovered
cost in beginning of year + Cash flow in the year.
 Accounting rate of return- The methods used by companies to measure the
expected rate at which revenues from investment will be produced are defined.
Formula to calculate rate of return:
ARR= (Average annual profit after depreciation / Investment) x 100
 Net present value method- It is a technique for estimating the importance of a given
project's actual valuation (Blessett and Box, 2016).
Calculate NPV:
NPV = Discounted cash flow – Initial investment
 Internal rate of return- The internal return rate is determined in order to assess the value
of the project in this form of methodology (Haldane, 2016). IRR estimation formula:
Analysis of efficiency of ferry:
Initial investment = 150000
YEAR Discount Factor Cash Flow Computation
1 0.971 55230 53628.33
2 0.943 70045 66052.43

3 0.915 88375 80863.12
4 0.888 79870 70924.56
5 0.863 57555 49669.96
Decommissioned 0.863 45000 38835
TOTAL 359973,4
NPV 359973.4-150000=209973.4
NPV=PRESENT VALUE OF CASH INFLOWS-PRESENT VALUE OF CACH OUTFLOWS
Analysis- as per this net present value, it can be determined that it is advantageous for the above
business to buy a new boat. That is because their project's present worth is positive.
CONCLUSION
At the conclusion of the project report, this can be stated that the funding is an essential
feature of businesses and businesses collect funds from different sources for these purposes. The
report concludes on both quick and long-term funding options and on different strategies for
measuring assets such as internal return rates, net present value and so on. In the end, this could
be said to acquire new ferry by the client.

REFERENCES
Books and journal:
Fanea-Ivanovici, M., 2018. Crowdfunding—A Viable Alternative Source of Finance for the Film
Industry. Rev. Econ, 70, pp.79-88.
Myers, M. and Gallagher, K., 2017. Chinese Finance to LAC in 2016. Inter-American Dialogue.
http://www. thedialogue. org/wp-content/uploads/2017/02/Chinese-Finance-to-LAC-in-
2016-Web-and-email-res. pdf.
Marshall, A., McCann, L. and McColgan, P., 2016. The choice of debt source by UK
firms. Journal of Business Finance & Accounting, 43(5-6), pp.729-764.
Blessett, B. and Box, R.C., 2016. Sharecropper finance: Using the justice system as a public
revenue source. Public Integrity, 18(2), pp.113-126.
Haldane, A., 2016. Finance Version 2.0. Speech, Bank of England, 7.