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(PDF) Fundamentals of Corporate Finance

   

Added on  2021-04-17

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Running head: FUNDAMENTALS OF CORPORATE FINANCEFundamentals of Corporate FinanceName of the Student:Name of the University:Authors Note:
(PDF) Fundamentals of Corporate Finance_1

FUNDAMENTALS OF CORPORATE FINANCE1Table of ContentsQuestion 2: Depicting the value drivers in NPV calculation, while stating sensitivity analysisto examine its impact on the NPV..............................................................................................2Question 3: Providing relevant recommendations about investing in Zinser machine, whilestating whether investment in Zinser is adequate or paying dividends and depict therecommended course of action...................................................................................................4Reference and Bibliography:......................................................................................................6
(PDF) Fundamentals of Corporate Finance_2

FUNDAMENTALS OF CORPORATE FINANCE2Question 2: Depicting the value drivers in NPV calculation, while stating sensitivityanalysis to examine its impact on the NPVThe value drivers that can be identified as the main components of NPV calculationare volume growth rate, inflation, discounting rate, price per unit. annual volume, and directmaterial per unit. The identified drivers mainly indicate the overall cash inflow and outflow,which is been conducted in the NPV calculation. Furthermore, the changes in volume growthrate, and inflation directly altered the overall cash outflow and inflow of the NPV valuation.The purpose of NPV methods is to identify whether relevant option is adequate forconnecting the relevant option and increasing profitability from the operation. Baum andCrosby (2014) mentioned that companies mainly use investment appraisal techniques toidentify viability of the project, which could increase its overall firm value. The relevantevaluation of the value drivers is depicted as follows.Volume Growth rate:The increment and volume growth rate as a relatively 2% throughout the tenureprocess, which indicates the rising demand for the product that it will increase eventually infuture. The constant percent rate relatively increases the volume growth of 484,500 to579,022 within 10 years of the evaluation process. In this context, Li and Trutnevyte (2017)mentioned that with relevant evaluation of demand the estimated increment in productionneeds to be conducted to maintain the level of competition in the market.Inflation:The second value driver that is identified from the analysis is the calculation ofinflation, which relatively helps in increasing the overall prices of the product. Inflation ratemainly increased the overall selling price of the product, which helps in raising the level of
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