Financial Management: Analysis of P-Rec and T-Rec Projects

Running head: FINANCIAL MANAGEMENT
Financial management
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1FINANCIAL MANAGEMENT
Executive summary
The aim of the report is to analyse the P-Rec project in detail as per the demand of the
company’s CFO. It will analyse the cost involved with the project and expected earnings
from the same. As the project is considered to have adverse impact on the health of the users
it will analyse another alternative project T-Rec that is less harmful and less effective. The
report will compare P-Rec with T-Rec and accordingly recommendation regarding both the
projects will be provided.

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Table of Contents
1. Introduction.........................................................................................................................3
2. Findings..............................................................................................................................3
2.1 Quantitative.................................................................................................................3
2.2 Qualitative...................................................................................................................5
3. Recommendation and justification.....................................................................................5
4. Detail comparison and further recommendation................................................................5
5. Conclusion..........................................................................................................................7
Reference....................................................................................................................................8
Appendix....................................................................................................................................9
1. Cash flow table for P-Rec...............................................................................................9
2. Cash flow table for T-Rec...............................................................................................9
3. Comparison of P-Rec and T-Rec....................................................................................9
4. Cross over rate...............................................................................................................10

3FINANCIAL MANAGEMENT
1. Introduction
Allcure Inc is currently engaged in researching and developing the next generation
diabetes drug that is started in the year 2017. Though the company has already, the firm is in
the view that the target result will take additional 6-8 years to get the target result. However,
the company is now planning to release revolutionary pre-version of the drug named as P-Rec
that is feared to cause health hazard for long term in case of some patients. The report will
analyse the P-Rec project in detail as per the demand of the company’s CFO (DeFusco et al.
2015). In analysis part the cost involved with the project and expected earnings from the
same will be analysed. Further, the project will be compared with another project T-Rec that
is comparative less hazardous than P-Rec but at the same time less effective than P-Rec.
2. Findings
2.1 Quantitative
Considering the given information various methods has been used for analysing the P-
Rec project as follows –
 NPV – NPV or net present value is the likely cash flow of any project over the useful
life of the same reduced by the initial cash outflow spent for acquiring the project. It
is a crucial approach to analyse the decision associated with the investment as it
provides the clear to the company management whether the project will add value or
wear away the cash of the company. Generally, if the NPV of the project is positive it
is accepted as it indicates value addition to the company (Fleten et al. 2016). On the
contrary, the project is rejected if the NPV is negative. It can further be used for future
capital projects or acquisition of new project. Looking into the computation it can be
identified that after considering all the expenses associated with P-Rec project and