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Financial management | Assignment Solution

   

Added on  2021-06-15

9 Pages1981 Words17 Views
Running head: FINANCIAL MANAGEMENTFinancial ManagementName of the Student:Name of the University:Author’s Note:
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FINANCIAL MANAGEMENT1Table of ContentsAnswer to Question 1......................................................................................................................2Answer to Question 2......................................................................................................................3Requirement (a)...........................................................................................................................3Requirement (b)...........................................................................................................................4Requirement (c)...........................................................................................................................5Requirement (d)...........................................................................................................................6Requirement (e)...........................................................................................................................6Answer to Question 3......................................................................................................................6Reference.........................................................................................................................................8
Financial management | Assignment Solution_2
FINANCIAL MANAGEMENT2Answer to Question 1Particulars012345Initial Investment:Equipment Cost-$50,00,000Land Cost-$3,00,000Additional Current Asset-$4,00,000Total Initial Investment-$57,00,000Opearting Cash Flow:Selling Units$2,00,000$2,00,000$2,00,000$2,00,000$2,00,000Selling Price per unit$10$10$10$10$10Sales Revenue$20,00,000$20,00,000$20,00,000$20,00,000$20,00,000Fixed Costs-$5,00,000-$5,00,000-$5,00,000-$5,00,000-$5,00,000Depreciation on Equipment-$10,00,000-$10,00,000-$10,00,000-$10,00,000-$10,00,000Net Profit before Tax$5,00,000$5,00,000$5,00,000$5,00,000$5,00,000Income Tax-$1,50,000-$1,50,000-$1,50,000-$1,50,000-$1,50,000Net Profit after Tax$3,50,000$3,50,000$3,50,000$3,50,000$3,50,000Add: Depreciation$10,00,000$10,00,000$10,00,000$10,00,000$10,00,000Net Operating Cash Flow$13,50,000$13,50,000$13,50,000$13,50,000$13,50,000Salvage Value:Salvage Value of Equipment$12,00,000Salvage Value of Land$5,00,000Total Salvage Value$17,00,000Less: Tax on Profit on Sales-$4,20,000Net Salvage Value after Tax$12,80,000Recovery of Current Assets$4,00,000Cash Flow from Salvage Value$16,80,000Net Cash Flow-$57,00,000$13,50,000$13,50,000$13,50,000$13,50,000$30,30,000Discount Rate12%12%12%12%12%12%Discounted Cash Flow-$57,00,000$12,05,357$10,76,212$9,60,903$8,57,949$17,19,303Net Present Value$1,19,725YearsFigure 1: (Image showing Capital Budgeting techniques)Source: (Created by Author)As per the case study which is provided in the question, Home Guardian has completed aresearch study on a new pest control device which the company was developing. The company
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