Short term and long term sources of finance and investment appraisal techniques

Individual
Report
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Short term and long term sources of finance..............................................................................3
Investment appraisal techniques.................................................................................................4
CONCLUSION................................................................................................................................6
REFRENCES...................................................................................................................................7
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INTRODUCTION
Business expansion is defined as a strategy through which a company able to growth its
numbers of store at local, national and international level. Through this company also increase
their sales, profitability and customer's base (Afoke and et. al., 2013). Organisation selected for
this report is Zylla Limited that provide numbers of ferries river crossing services for goods,
vehicles and people. Now management want to buy new ferry to fulfil increased demand for
which company required funds for acquisition of ferry as well as for paying working capital
requirement of expansion. Topics include in this report are short term and long term sources of
finance for attaining Zylla objective as well as it also include investment appraisal techniques.
MAIN BODY
Short term and long term sources of finance
There are several source of funding through which a company can adopt in order to
arrange funds such as debt, retaining earning, working capital, equity, term loan, letter of credit,
euro issues and many others. In context of Zylla Limited they required funds for acquiring ferries
as well as they required working capital for expansion, for this they may adopt different long
term and short term finance sources, from which some main sources are given below:-
Long term sources Term loan: This technique is monetary loan which is essential to repaid over a specific
period of payment or after fixed time duration. This type of loan are generally last for
more than one year to ten years but in some case it last for 30 years. It is beneficial for
company because in this interest on loan will deducted from the profit as well as in this
no need to distribute profit (Ezeokoli, Adebisi and Olukolajo, 2014). But it have some
disadvantage like it is more expensive because of interest rate. In respect of Zylla Limited
they may adopt this technique for arranging funds for acquisition of ferries in effective
manner.
 Equity capital: It is mostly used technique for long term funding and in this funds are pay
by investors for the exchange of common preferred goods. This source of arranging funds
is considered as core funding in which debt funding are added. There are several
advantages of adopting this methods such as it have limited liabilities, exercise control,
bonus shares and so on. On the other hand it also have some disadvantages such as it
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