Corporate Financial Management Reports

Running head: CORPORATE FINANCIAL MANAGEMENT
Corporate Finance
Name of the Student:
Name of the University:
Author’s Note:

CORPORATE FINANCE1
Table of Contents
Investment Project Analysis............................................................................................................2
Bibliography....................................................................................................................................3
Appendix..........................................................................................................................................4

CORPORATE FINANCE2
Investment Project Analysis
The investment project analysis that has been analyzed for the project can be well
evaluated with the help of the capital budgeting technique primarily the Net Present Value which
would be crucial in determining the overall feasibility of the investment project. The project
analysis in specific has been done by undertaking the cash inflows and cash outflows that the
project will be getting for a sum of three years. The initial cash investment that the company will
be doing for the project will be around $220,000 for the machinery which will be having a scrap
value of around $40,000. The depreciation that would be charged to the machinery will be
straight line method whereby depreciation has been treated as a non-cash expenses. Increase in
the sales price and the variable costs have been well accounted at the given or applicable set of
growth rates. The taxation rate charged was around 15% and the discounting rate considered for
discounting the cash flows of the company was around 12%. After summing up the discounted
cash flows the net present value of the project came to around $98,874. The key reason behind
the positive NPV is due to the higher amount of cash inflows that is involved in the project in
respect to the cash outflows that is received from the project. The variable costs and fixed costs
incurred in the project is comparatively lower which has allowed in creating a positive wealth.
The project should be accepted as the same would be creating for the capital/shareholders of the
company.