Finance for Manager: NPV, Project Appraisal, Pricing Strategies

Finance for Manager

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
Compute the Net Present Value of the two projects- Alpha and Gamma and give
recommendation for the company's project................................................................................3
TASK 2............................................................................................................................................4
Evaluate two method of project appraisal except NPV..............................................................4
Asses the two pricing strategies..................................................................................................5
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
The Net Present value (NPV) is the difference of the present value of cash inflows and
outflows. It is used in the capital estimation and investment planning to determine the
profitability of the project on the investment done. It also estimates the values of future cash
flows of every period and determines the correct discounting rate. Project appraisal is a process
of assessing and comparing the viability of the projects. Some tools are used to make the
decisions for the betterment of the company. It is used for the development of the company. The
pricing strategy helps the company to sustain for the long – run in the market (Siew and et. al.,
2019). This report, has analysed the cash flows of project alpha and gamma and calculated the
net present value. Based on the NPV,a project is selected. The pricing strategies and the project
appraisal tools are also use for the benefit of the company Bravo.
TASK 1
Compute the Net Present Value of the two projects- Alpha and Gamma and give
recommendation for the company's project.
Net Present Value: It is a capital budgeting tool to determine the profitability of the
investment (Tosetti and et. al., 2018). It calculates the present value of the investment based on
the discounting rate.
 Project Alpha: Initial Investment = 1750000
 Project Gamma: In Project Gamma, Cash Outflow is calculated by adding the Hire
expenditure of plant and equipment and other expenses.