Financial Management .

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

Table of Contents
Part A...............................................................................................................................................3
Part B...............................................................................................................................................7
Reference.......................................................................................................................................10

Part A
1) Investment Appraisal Methods
The three-investment appraisal used for assessing the viability of the project were the Net
Present Value, Internal Rate of Return and the Payback Period. The common investment
appraisal techniques are applied for assessing the financial viability of the project. The Net
Present value shows the profitability of the project generated while investment. The net present
value of the project was around 57.79 that shows the net profitability from the project. The
internal rate of return for the project was around 12% and the payback period for the project was
around 3.23 years. The required rate of return for the project was taken as 105 for discounting
the cash flows and for assessing the viability of the project (Baum and Crosby 2014). The
payback period for the project was less than the four years of time, which is well within the
period of the project. However, it is crucial to note that the internal rate of return from the project
was around 12%, which is less than the company Return on Investment from similar project is in
the historical period. There are other factors and conditions like the sustainability in the cash
flows and the recovery of the profitability of the company are some of the common terms, which
should be assessed and evaluated by the company (Gotze, Northcott and Schuster 2016).
2) Project Evaluation
a) The financial viability and assessment of the project should be done based on the
investment return provided by the project and the required rate of return from the
same. There are various factors, which should be evaluated for a project based on the
sustainability and profitability of the project (Magni and Martin 2017). The
profitability of the project was measured in the terms of the net present value created

for the investors of the company. The net present value of the project was at positive
level, which indicates that the shareholders wealth will increase by the profitability
from the project. The company should go ahead with the project as the net present
value and the Internal rate of return is positive for the company and the same was
assessed by applying the initial investment for the project and the annul expected cash
flow from the project (Banerjee 2015). The payback period for the project was quite
less than the company’s target for payback period and the same will help the
company in the recovery of the investment done by the company. However, the return
on investment as observed by the company that the ROI from the project for the most
recent years were around 18% but it is not possible for the company to have the same
type of investment and profitability from every project (Liu et al. 2017). The internal
rate of return was quite much higher than the required rate of the project for the
company, which shows that the management of the company should accept the
project as the same would help in creating value for the company.
Net Present Value Flows Cash Flows@10%
0 -1200 -1200
1 200 181.8181818
2 250 206.6115702
3 471 353.8692712
4 456 311.4541356
5 247 153.3675668
Net Present Value 7.120725733