A study on Capital structure and Capital investment
15 Pages2437 Words31 Views
Added on 2020-03-23
A study on Capital structure and Capital investment
Added on 2020-03-23
ShareRelated Documents
A study on Capital structure andCapital investment1 | P a g e
Executive SummaryThe present assignment deals with case study on ASX limited company that specialize inofferings Advertising services and asked its finance team to prepare a report that will throw somelight on capitalize of the firm. The report has covered different ways to assess the capitalstructure which will reveals about profitability and wealth maximization done by company overthe year. By going this report, the reader will get insight on how market returns and company'sasset and liabilities are used to determine the wealth earning capacity of the firm and how a firmis meeting the interest of shareholders.2 | P a g e
ContentsIntroduction......................................................................................................................................3Part A...............................................................................................................................................3After tax cash flows.....................................................................................................................3Payback period.............................................................................................................................6Discounted payback period..........................................................................................................7NPV.............................................................................................................................................8Profitability Index (PI).................................................................................................................9Part B.............................................................................................................................................10Conclusion.....................................................................................................................................11Bibliography..................................................................................................................................123 | P a g e
IntroductionThe assignment discusses on investment proposal and capital structure of the company to assess the financial stability of the firm. The report covers different methods of capital budgeting techniques which are used to make a decision of acceptance of any project. It also highlights on maximizing of shareholders value by capital structure.Part A After tax cash flows Base case (units in $millions)Yearcalculations12345678Revenue inflows 1.4451.5901.7481.9232.1152.3262.5582.814Cost inflows-1.1811.2521.3271.4071.4911.5801.6751.775Nets cash flow beforetax=0.2640.3380.4210.5160.6240.7460.8831.039Depreciation-0.190.190.190.190.190.190.190.19Income before taxes=0.070.140.230.330.430.550.690.85Taxes 30%30% on Income tax0.020.040.070.100.130.170.210.26After tax net income=0.050.100.160.230.300.380.480.59Add back depreciation +0.190.190.190.190.190.190.190.19After tax cash flows=0.240.290.350.420.490.570.670.78After tax salvage value +-------0.07After tax total net cash flows=0.240.290.350.420.490.570.670.854 | P a g e
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Capital Investment Appraisal Assignmentlg...
|12
|1693
|204
Managerial Finance: NPV, IRR, Payback Period, ARR, Profitability Index and Sensitivity Analysislg...
|12
|2128
|142
Business Financelg...
|18
|2844
|466
Capital Budgeting: Analysis and Evaluation of Projectslg...
|16
|2699
|25