Sources of Finance and Investment Appraisal Techniques for Acquiring a New Ferry

FINANCE

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Short term and long term sources of finance to fund the acquisition of the ferry and for the
company’s working capital needs................................................................................................3
2. An evaluation of various investment appraisal techniques and recommending the viability
of the acquisition and operation of the new ferry based on one suitable investment appraisal
technique......................................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Finance is key for any type of business entity in order to conduct different activities and
operations (Romani and Stern, 2016). Companies acquire funds from various kinds of sources.
The project report is based on a company which operates in providing river crossing services
through ferries. Company is planning to expand its business and planning to acquire new ferry.
The report covers detailed information regards to sources of finance. As well as evaluation of
different investment appraisal techniques.
MAIN BODY
1. Short term and long term sources of finance to fund the acquisition of the ferry and for the
company’s working capital needs.
There are different kinds of sources of funds which are needed by business entities in
order to acquire funds. Mainly, these source of funds can be categorised into two parts which are
as follows:
(i). Short term source of funds- These are type of source of funds which are acquired by business
entities for short time period less then one year. Basically, short term funds are needed in order
to fulfil working capital requirement. Such as Zylla Limited company can acquire funds from
below mentioned short term funds:
 Bank credit- Commercial banks provide short term funds to companies that is known as
bank credit. This can be provided by banks in many ways such as:
* Loans- This is granted to companies against security of assets. By help of it, this become easier
for business entities to acquire funds at lower cost. Such as Zylla limited company can acquire
short term loan for quick term and can fulfil own working capital requirement.
* Overdraft- It is type of facility that is provided by banks to customer to withdraw funds in
excess balance of bank account. In Zylla limited company, they can get short term funds to make
payment of day to day activities after acquiring ferry.
 Commercial paper- It is a type of short term financing tool which is used by companies
with higher credit rating to acquire funds from market (Jerzmanowski, 2017). This is
suitable for those business entities which have a better reputation in market. Like in the