Financial Management: Investment Appraisal and Market Efficiency

Financial management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Part A...........................................................................................................................................3
Part B ..........................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Financial management is most important aspect in the business that include the excellent
knowledge in financial terms and also refers to planning, organising, directing and controlling of
financial undertakings (Akbasheva and Yaitskaya, 2021). It is refers as essential form of
determining and allocation of the objectives of the company. In this report, it is being discussed
about the different forms of investment appraisal such as Payback period, Accounting rate of
return, Net present value and IRR and discussed their limitation and benefits in the organisation.
Apart from that it is being evaluated the three differing strengths of market efficiency with the
support of relevant academic evidence.
MAIN BODY
Part A
Payback Period Project X
year CF CCF
Payback
period of
project X is
3.04
1 80000 80000 10000
2 60000 140000
3 50000 190000
4 30000 220000
0.04545454
55
Project Y
year CF CCF
Payback
Period is
3.03
1 30000 30000 60000
2 30000 60000
3 60000 120000

4 80000 200000 0.3
NPV:
Year Project X PV factor table Discounted cash flow
1 80000 0.91 72800
2 60000 0.83 49800
3 50000 0.75 37500
4 90000 0.68 61200
221300
NPV 21300
Year Project X PV factor table Discounted cash flow
1 30000 0.91 27300
2 30000 0.83 24900
3 60000 0.75 45000
4 80000 0.68 54400
151600
NPV -28400
ARR
Year Project X Depreciation Accounting profit
1 80000 35000 45000
2 60000 35000 25000
3 50000 35000 15000
4 90000 35000 55000
Total of profit 140000
average profit 35000
Project X 17.5