logo

Corporate Financial Management | Report

   

Added on  2020-03-16

16 Pages1896 Words48 Views
Running head: CORPORATE FINANCIAL MANAGEMENTCorporate Financial ManagementName of the Student:Name of the University:Authors Note:

CORPORATE FINANCIAL MANAGEMENT1Executive Summary:The overall report directly evaluates the investment option that is presented to Riverlea. Inaddition, the report provides relevant calculations for deriving the discounting rate andadequate investment appraisal techniques used in evaluating viability of the project.Moreover, sensitivity analysis is also conducted to evaluate the project under adverse andpositive circumstances, which in turn might help in detecting viability of the project. Therelevant evacuation of the production of confectioneries under different circumstances depictsviability of the project, which could generate higher return. Hence, the positive valuesdepicted by the investment appraisal techniques mainly indicate viability of the project.Therefore, it is advisable to Riverlea to commence with the production of confectioneries, asit could help in improving returns and increasing firm value in future.The main aim is to identify the relevant changes in share price of Riverlea after theaccouchement of extra income in future. Moreover, the adequate evaluation is beenconducted to detect whether the shares of Riverlea comes under weak market efficiency.Furthermore, the share price value of Riverlea after announcement of the extra income didnot increase the anticipated impact on share price. This relatively indicates that shares of thecompany have semi medium form of market efficiency.

CORPORATE FINANCIAL MANAGEMENT2Table of ContentsPart 1:.........................................................................................................................................31. Introduction:...........................................................................................................................32. Findings:.................................................................................................................................32.1 Calculating the Discounted Rate:.........................................................................................32.2 Drafting the expected cash flows of the project:..................................................................42.3 Sensitivity Analysis:.............................................................................................................62.3.1 Drafting the cash flow when 40% probability is there for 40% lowers incrementalrevenues:....................................................................................................................................62.3.2 Drafting the cash flow when 10% probability is there for 20% increase in incrementalrevenues:....................................................................................................................................83. Concussion and Recommendations:....................................................................................10Part 2:.......................................................................................................................................101. Introduction:.........................................................................................................................102. Findings:...............................................................................................................................112.1 Determining that stock has semi-strong market efficiency:...............................................112.2 Portraying the relevant trading strategy:............................................................................133. Concussion and Recommendations:....................................................................................13Reference and Bibliography:....................................................................................................14

CORPORATE FINANCIAL MANAGEMENT3Part 1:1. Introduction:The overall aim of the report is to identify the relevant viability of the new project,which could help in increasing relevant firm value in future. In addition, the report providesrelevant calculations for deriving the discounting rate and adequate investment appraisaltechniques used in evaluating viability of the project. Moreover, sensitivity analysis is alsoconducted to evaluate the project under adverse and positive circumstances, which in turnmight help in detecting viability of the project.2. Findings: 2.1 Calculating the Discounted Rate:From the overall evaluation of the above figure, relevant discounting rate that needs tobe used in the investment appraisal techniques could be identified. This could eventually helpin detecting the NPV value and discounted payback period value. The relevant detection ofthe CAPM value is mainly helpful in identifying viability of the project. The calculationmaidenly needs risk free asserts, which is 5.05%, while the beta of the stock is calculated to1.56 and market return is detected at 9.52%. This mainly helps in identifying the CAPMvalue to be at 12.03%, which is used in the investment appraisal techniques (Willcocks2013).

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
(solved) Corporate Financial Management PDF
|16
|1888
|32

Corporate Finance Assignment Report
|17
|2427
|43

Corporate Finance Assignment | Financial Analysis Assignment
|17
|2057
|23

Report on Corporate Financial Management (Doc)
|15
|1932
|41

FIN80005 Introduction to Corporate Financial Management
|16
|2061
|76

ACC508 Corporate Finance Assignment
|16
|2256
|461