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Paper on Evaluating Sources of Funding

   

Added on  2020-04-15

11 Pages1283 Words66 Views
Finance
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Paper on Evaluating Sources of Funding_1

Executive summaryBefore making a decision on which investment project to implement, it is important toanalyze the projects statistically. It is also important to determine the sources of capital before designing an investment plan for a company. The sources of capital for Beauty and the Beholder include bank loans, SBA loans and venture capitalism. The investment analysis methods used in this assessment shows that the project is viable but the most suitable method that should be used in the internal rate of return. This is because the method considers time value of money and uses the cash flow throughout the life-cycle of the project.Table of Contents
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Introduction.................................................................................4Q1. Sources of finances...............................................................4Q2. Decision to invest.................................................................5Questions asked.........................................................................10Conclusion.................................................................................10References.................................................................................11
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IntroductionThis paper evaluates and analyzes the various sources of funding available to Beauty and Beholder Plc and the viability of the investment opportunity. There are various long term sources of funding that are available to companies for investment and they include: Angel equity funding, bank loans ,SBA loans ,venture capitalism as well as Local and state economic development organizations (DeFusco, McLeavey, Pinto& Runkle, 2007). The viability of the investment is also conducted using IRR, payback period and Net Present Value method. A recommendation is made depending on the analysis. The questions that need to be asked in order to assess the investment are alsolisted in the paper.Q1. Sources of financesThere are various sources of long term funding that Beauty and Beholder Plc can consider seeking their sources of funds to finance their expansion. The following are some of the most suitable sources of funding that the company can consider:First option is bank loan. Bank loans are one of the best sources of finance of investments. Bank loans provide all asset needs including working capital, equipment,and real estate funding. The bank charges an interest rate for their loans and they vary depending on various factors such as terms of payment and the prevailing market rates. One of the advantages of loans is that they are flexible since you can pay off theloan earlier and reduce additional costs related to interests. The disadvantage with loans is that the interest rates are so high hence costing the company a lot of money through interest rates payed. The other suitable source of funding is the SBA loans which are sponsored by the federal government (Warren, Reeve & Duchac, 2018). It
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