Financial Management: Analysis of Expansion Project by Jet Airways

Running head: FINANCIAL MANAGEMENT
Financial Management
Name of the Student:
Name of the University:
Author’s Note:

1FINANCIAL MANAGEMENT
Executive Summary
The aim of the assignment is to conduct a financial analysis on the expansion project that will be
initiated by the Jet Airways Company. The analysis of the investment will be done after taking
key expenses from the company in the trend period. The revenue of the company will be
generated from the various customers that will be using the services provided by the Jet Airways
for the Business Class Services. The revenue and expenses of the company has been taken at an
increasing trend of about 10% per year. The net profit of the project was derived after adding up
all the sources of income that will be generated by the company and key expenses that will be
incurred on a yearly basis by the company. The depreciation being non-cash expenses was added
back to the net profit of the company. Investment Appraisal tools like Net Present Value, Internal
Rate of Return and Payback period was applied for assessing the financial viability of the
project. The profitability and the return generated by the expansion project was considered to be
viable as the acceptance of the project will increase the wealth of the stakeholders of the
company.

2FINANCIAL MANAGEMENT
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Capital Budgeting........................................................................................................................3
Net Present Value........................................................................................................................5
Internal Rate of Return................................................................................................................5
Payback Period and Discounted Payback Period........................................................................6
Recommendation.............................................................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9
Appendix........................................................................................................................................11

3FINANCIAL MANAGEMENT
Introduction
Evaluation of Capital Budgeting Project from the perspective of Jet Airways Company
for the expansion of the various products and services of the company. Expansion of the services
of the Airways Company in the form of providing Business Class Services to the consumers is
the plan presented. The company will be incurring fixed costs in the form of purchase of
equipment’s or assets for the company as well as direct operational expenses for the operations
of the company. Financial Sustainability and viability of a project plays a crucial role in the long-
term so that the company is able to create wealth for the shareholders of the company (Rossi
2015). The viability of the expansion project was done by analysing the same with the use of Net
Present Value, Internal Rate of Return and Payback Period. Various factors and conditions needs
to be taken into consideration while analysing the viability and sustainability of the project.
Expansion of the business services in the form of increasing the products and services provided
by the Jet Airways will be taken into account depending on the profitability and sustainability of
the project (Burns and Walker 2015).
Discussion
Capital Budgeting
The investment assessment tools will be applied by the company for assessing the
sustainability will be the NPV, IRR and Payback Period that will be guiding the company on the
fact of accepting or rejecting a project. The Capital Budgeting will help the company whether the
initial invested capital is generating significant returns for the company (Rossi 2014).
The revenue of the company was said to be primarily contributed from the business class
services that the company will be providing. The customer base of the company was taken at