Financial and Non-financial Aspects- Report

Added on -2020-02-05

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Finance for Managers
Table of ContentsINTRODUCTION......................................................................................................................3MAIN BODY.............................................................................................................................31. Critically identify the suitable option for the hospital by evaluating all the parameters...32. Analyzing the financial areas that hospital needs to consider for taking decision.............43. Critically evaluating the options that are available to the hospital on the basis of non-financial considerations..........................................................................................................44. Sating the evidence based recommendations.....................................................................5CONCUSION............................................................................................................................5REFERENCES...........................................................................................................................7
To, Board of Directors, Green care hospitalDate: 7th December, 2016INTRODUCTIONIn the business organization, manager has responsibility to make in-depth evaluationof all the projects which are available to them. This in turn helps business organization inmaking selection of the suitable project that aid in the growth and success of it. The presentreport will provide information about the financial and non-financial aspects that care unitneeds to consider while making selection of the proposal.MAIN BODY1. Critically identify the suitable option for the hospital by evaluating all the parametersSpecifically, there are mainly three options available to the care unit though which it canreduce the financial constraints to the large extent as follow:Option 1Do nothing with the café and it will be ranby the existing volunteers.Option 2Lease out the café to either Starbucks orlocal café owner such as Greasy Joe’s.Option 3Modernization of café and then it would berun by the existing catering departmentFrom the investment appraisal analysis it has been assessed that third option will prove to bemore beneficial for the care hospital. The rationale behind this, net present value of thirdoption is £8,08,251. On the other side, if Green care hospice gives café to Starbucks on leasethen NPV of such proposal is 706625. Further, if leasing opportunity will be offered to localcafé owner then NPV is £737348. Hence, by considering such aspect it can be said that careenterprise needs to lay emphasis on the modernization of café. This in turn helps hospice ingetting the desired level of financial outcome or success. Moreover, NPV method of capitalbudgeting offers highly realistic solution by taking into accounts the time value of moneyconcept (Fields, 2016).Parameters or assumptions undertaken for the evaluation are as follows:Growth rate of the cash flows is assumed on the basis of market trend and analysis.Interest rate is 10% when loan is taken for 2-3 years.Further, when property is provided at lease for the period of 10 years then cost of debtwill be 6%.Cost of capital will be 10%.2. Analyzing the financial areas that hospital needs to consider for taking decisionAt the time of making section of the proposal from several Green care unit needs to considerfinancial aspects. The reason behind this, each action of the business unit has high level ofinfluence on both monetary and non-monetary aspects (Banks, 2015). Thus, management ofthe firm needs to make assessment of cost of capital, debt and other aspects while makingsection of the proposal are as follows:On the basis of the outcome of project evaluation if Green care unit selects thirdoption then it requires fund for the purpose of modernization. In this, by taking loanfrom the financial institution care unit can meet its monetary requirement to the largeextent. Thus, on the basis of collateral security hospice can generate fund. However,

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