Capital Budgeting Techniques- PDF
Added on 2021-05-30
14 Pages2263 Words47 Views
Running head: ACCOUNTING AND FINANCEAccounting and FinanceName of the Student:Name of the University:Author’s Note:
ACCOUNTING AND FINANCE1Executive SummaryThe assignment will be providing insights of two different business which are engaged in twodifferent industry. The assignment is divided into two parts and each part deals with the analysisof one of the business. In the first part, Saturn Pet care ltd which is engaged in manufacturingfood products has decided to expand its product line and thus for has tw0 options for productionof the new product in a site which are Bathurst Site and Wodonga Site. The first part will beapplying capital budgeting techniques for selecting the best possible option which is present tothe company. In the second part, analysis of the capital structure of ARB ltd is to be conductedand recommendation is also to be provided how the business can improve its capital structure.
ACCOUNTING AND FINANCE2Table of ContentsPart A...............................................................................................................................................3Capital Budgeting of Bathurst Site..............................................................................................3Product Cannibalization...............................................................................................................5Estimation of Marketing Sales Trend..........................................................................................5Original Cost of Factory Inclusion in NPV Analysis..................................................................5Part B...............................................................................................................................................6Introduction..................................................................................................................................6Capital Structure and Cost of Capital..........................................................................................6Weighted Average Cost of Capital..............................................................................................7Cost of Equity Under CAPM Approach......................................................................................8Comparison between ARB Ltd and Modine Ltd.........................................................................8Financial Ratio Analysis of ARB Ltd..........................................................................................9Change in Capital Structure.......................................................................................................11Wealth Maximization Principle.................................................................................................11Recommendations..........................................................................................................................12Conclusion.....................................................................................................................................12Reference.......................................................................................................................................13
ACCOUNTING AND FINANCE3Part ACapital Budgeting of Bathurst SiteFigure 1: (Image Showing Capital Budgeting Techniques for Bathurst Site)Source: (Created by Author)
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