Running Head: Financial and Business Performance Part A

Running Head: Financial and business performance
1
Financial and business performance

Running Head: Financial and business performance
Table of Contents
Part A........................................................................................................................... 3
Expected performances.................................................................................................. 3
Tax implications........................................................................................................... 3
Risks involved............................................................................................................. 3
Graphs....................................................................................................................... 4
Recommendation of investment to be chosen..........................................................................4
Political impact............................................................................................................... 4
Source of information for researching.................................................................................... 5
Key Principles of cash budget............................................................................................. 5
Different business structures............................................................................................... 5
PART B........................................................................................................................ 6
PART C........................................................................................................................ 8
Ways to get feedback..................................................................................................... 8
Strategies.................................................................................................................... 8
References................................................................................................................... 10

Running Head: Financial and business performance
Part A
NPV and the internal rate of return are treated to be as the two major capital budgeting
decisions that are used in assessing the viability and the future potential of the project if accepted
by the company. The NPV of the project defines the difference between the present value of the
cash inflows and the present value of the cash outflows. The internal rate of return on the other
hand is the rate at which the NPV of the cash flows is equivalent to zero. Overall the capital
budgeting techniques are used to assess the five proposals for the owners of the Thorne
Manufacturing (Crosby, Devaney & Wyatt, 2018).
Expected performances
In terms of the performances, the current proposal entertains the IRR of 34%, whereas
that of the replacing of the machinery is 16%. On the contrary if the dividends that will be
declared are of $52000. The debentures are giving the cash flows of $1347790. So in overall
cases the proposal current proposal is worthy and beautiful.
Tax implications
From the perspective of the tax implications the debentures have the advantage of the tax
deduction and the current proposal as well replaced proposal also have accessed the benefits of
the tax.
Risks involved
The risks that are involved is the company might lose its dollars if the net present value is
negative and the company accepts the project just on the basis of higher IRR than the cost of
capital.

Running Head: Financial and business performance
Graphs
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-5000000
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-3000000
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-1000000
0
1000000
2000000
3000000
4000000
5000000
Net present value
Net present value
The net present value of the current proposal is shown in the form of the graph whereby
the value tends to be greater than the future value of the cash flows.
Recommendation of investment to be chosen
The best proposal that shall be selected by the company is the current business as it has
highest NPV as well as the internal rate of return. The NPV is $3929291 whereas IRR is 34%.
The other options have lower NPV and the less rate of return even lower than the cost of capital.
Hence, the proposal of purchasing the current business shall be opted.
Political impact
When the economy is accelerating and moving so fast and inflation is moving
significantly higher, the banks control the situation by the introduction of the short term rates of
the interests, which constitutes restrictive or tight monetary policy (Mumtaz & Theophilopoulou,
2017). On the other hand the economy is of sluggish nature, the bank will adopt an accepted