Finance for International Business

Running head: FINANCE FOR INTERNATIONAL BUSINESS
Finance for International Business
Name of the Student:
Name of the University:
Authors Note:

FINANCE FOR INTERNATIONAL BUSINESS 2
Table of Contents
Introduction:..............................................................................................................................3
Analysing the overall net cash flow of the project:.............................................................4
Identifying the overall cash flow that would be generated from the project after the
current conversion:..................................................................................................................8
Net Present Value, Payback Period and ROCE of the Project:.......................................9
Sensitivity Analysis:...............................................................................................................12
Conclusion:.............................................................................................................................15
Reference and Bibliography:...............................................................................................16

FINANCE FOR INTERNATIONAL BUSINESS 3
Introduction:
Investment appraisal technique can be considered as an adequate measure
that allows the organisations to identify the opportunity in an investment, which can
eventually help them to improve the returns and generate higher revenue in the
process. The assessment directly evaluates the project that was proposed to the
management of Organic Farm Foods Plc, which can improve their revenues in the
process. Moreover, the appraisal techniques such as net present value and payback
period has been utilised to detect whether the investment option is viable and could
generate the required rate of return in the process. Furthermore, the required rate of
return on capital employed is also calculated to determine the efficiency of the new
proposed project to improve the returns of Organic Farm Foods Plc.
Additionally, the project is situated with certain restrictions and limitation that
the has been followed to determine the level of changes in the company's overall
income and expenses in the long run. The relevant circumstances have been taken
into consideration to determine the overall of the company. Likewise, the currency
conversion rate has been taken into consideration to determine the level of free cash
flow that will be transferred to United Kingdom from Republic of Ireland. Moreover
adequate sensitivity analysis has been conducted to determine the level of changes
in the value of investment appraisal technique due to the alterations in fixed cost and
currency conversion rate.

FINANCE FOR INTERNATIONAL BUSINESS 4
Analysing the overall net cash flow of the project:
Particulars Value
Sales rate (Incremental) 20.00%
Labor cost rate (Incremental) 3.00%
Variable cost rate (Incremental) 3.00%
Fixed cost rate (Incremental) 2.00%
Tax rate (Ireland) 12.50%
Tax rate (UK) 19.00%
Variable Cost (Total) € 3,95,000.00
Particulars Value
Land for Purchase (Total Acres) 1,000.0000
Per Acre Costs € 8,088.00
Total Investments € 80,88,000.00
Investments (Additional) € 12,10,000.00
Investments (Net) € 92,98,000.00
Beta 1.450
10 Y. Government Bond
(Return) 1.320%
FTSE All Share Index (Return) 5.300%