logo

FINANCE EXECUTIVE SUMMARY Financial Planning and Evaluation

11 Pages2341 Words424 Views
   

Added on  2020-06-05

About This Document

FG TABLE OF CONTENTS EXECUTIVE SUMMARY 2 INTRODUCTION 1 a. Computation of WACC to determine required rate of return 1 (b) Preparation of cash flows and inclusion or exclusion of items 1 Viability of alternative 3 (d) Uneual lives of the project and its impact on recommendation 4 e.Sensitivity analysis 4 f. Sensitivity analysis of sale unit, revenue and raw material cost 5 (g) Advantage and disadvantage of lease 6 CONCLUSION 6 Table 1

FINANCE EXECUTIVE SUMMARY Financial Planning and Evaluation

   Added on 2020-06-05

ShareRelated Documents
FINANCE
FINANCE EXECUTIVE SUMMARY Financial Planning and Evaluation_1
EXECUTIVE SUMMARYFinancial planning and evaluation is highly significant which in turn provides high levelof assistance to the manager in making selection of best option out of several alternatives.Moreover, at the time of availability of several options manager faces difficulty in makingselection of the best project that aid in the growth and success of firm. In this regard, financialtools and techniques such as investment appraisal provide high level of assistance in evaluatingthe viability of proposals. Capital budgeting tools clearly state the return and time period withinwhich firm will recover its initial investment. For this project report, scenario of Phone companyhas been considered which is involved in the activities of manufacturing covers. It can besummarized from the report that business unit should go with the proposal A which in turn offershigher return to the company. Moreover, in the case of project B, NPV and IRR accounts forsignificantly. It can be seen in the report that WACC is 17% which in turn considered asdiscounting factor. Along with this, it can be stated that by developing strategic and competentframework on the basis of sensitivity analysis business unit can gain competitive edge overothers. FG
FINANCE EXECUTIVE SUMMARY Financial Planning and Evaluation_2
TABLE OF CONTENTSEXECUTIVE SUMMARY.............................................................................................................2INTRODUCTION...........................................................................................................................1a. Computation of WACC to determine required rate of return..................................................1(b) Preparation of cash flows and inclusion or exclusion of items..............................................1© Viability of alternative.............................................................................................................3(d) Uneual lives of the project and its impact on recommendation.............................................4e.Sensitivity analysis....................................................................................................................4f. Sensitivity analysis of sale unit, revenue and raw material cost..............................................5(g) Advantage and disadvantage of lease....................................................................................6CONCLUSION................................................................................................................................6REFERENCES................................................................................................................................8Table 1Calcualtion of NPV.............................................................................................................3Table 2Calculation of IRR...............................................................................................................3
FINANCE EXECUTIVE SUMMARY Financial Planning and Evaluation_3
INTRODUCTIONIn the present times, business entities can attain success only when it develops highlycompetent plan or framework. Now, several financial options are available to the firm whichthey it can use for the maximization of productivity and profitability. In this regard, financemanager of the firm can take suitable decision by using monetary tools and techniques. This inturn helps business unit in making optimum use of financial resources and thereby assists ingetting the desired level of outcome or success. The present report is based on the case scenarioon phone which is a leading manufacturing company in Perth CBD. It manufactures and offersquality iPhone covers to the customers which are made from elastomer. In this, report will shedlight on the manner in which investment appraisal tool and techniques aid in decision making.Besides this, report will also highlight the proposal which company should select out of twoavailable options. Further, it also depicts the \extent to which unequal lives of the project hasinfluence on the selection of proposal. a. Computation of WACC to determine required rate of returnWACC= ((E/V) * Re) + [((D/V) * Rd)*(1-T)]Particulars Figures Market valueof the company'sequity (E)$8 million Market valueof the company'sdebt (D)$2 million TotalMarket Valueof the company (V = E + D)10 million cost of equity (Re)14%Cost of debt (Rd)9%Tax rate 30%WACC17%The above depicted table clearly shows that WACC is 17% which in turn considered byan analyst as discounting factor. By taking into account such discounting factor financial analystof Phone will assess whether the company should purchase new machinery or make focusproposal (b) Preparation of cash flows and inclusion or exclusion of itemsYear 1Year 2Year 3Year 4 Year 5Year 6Year 7Year 8Year 9Sales revenue1575000173250019057502096325230595825365532790209306922933761521 | P a g e
FINANCE EXECUTIVE SUMMARY Financial Planning and Evaluation_4

End of preview

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

Related Documents
(Solution) Assignment on Financial Management
|10
|2660
|36

Financial Accounting Assignment : WACC
|11
|1989
|53

Techniques of Project and Investment Appraisal in Financial Accounting
|14
|3215
|82

Comprehensive Report of Goodfellow PLC
|9
|1425
|67

Financial Analysis
|22
|4552
|493

Investment Projects considering PHONE : Report
|11
|2904
|48