Investment Appraisal Techniques for Super Tasty Limited and Business Valuation Methods for Dragon plc

INVESTMENT APPRAISAL
TECHNIQUES

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
QUESTION 2..................................................................................................................................3
(a) Recommendation to economic feasibility..............................................................................3
(b) Discussing the effect of proposal on Super Tasty Limited....................................................7
(c) Evaluation of benefits and limitations of investment appraisal techniques...........................8
QUESTION- 3...............................................................................................................................10
a) Valuation through the price earning ratio method.................................................................10
b) Valuation of Dragon plc by the discounted cash flow method.............................................11
c) Dividend valuation method for assessing the value of Dragon plc.......................................12
d) Problems associated with the valuation techniques and the most suitable option for Kings
plc..............................................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Financial management is all about implementing the processes and procedures in place
which assists in effectively handling and managing the financial resources of the company. In
this report, an analysis of the various investment appraisal techniques is being carried out which
helps in determining the feasibility of the investment proposal for the purpose of investment. In
addition to this, a critical discussion of the various business valuation methods is being done
which helps in determining the pros and cons of each of the method and selecting the right one.
QUESTION 2
(a) Recommendation to economic feasibility
For Super Tasty Soup (STS) Limited which is a fast food organization following are the
recommendation it its investment appraisals techniques for improving the economic feasibility.
Payback period :

The calculation of this payback period for this organization resulted in 3.08 years. This
payback period is the total amounted to time which the organization takes to generate the
revenue which is similar to the initial investment of the organization (Anabtawi, 2018). For
improving this period the organization needs to increase its total revenue. In order to do so STS
can provide the customers special offers that will influence them to purchase the product.
Accounting Rate of Return :