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FINC20018 Report on Finance - CQU printers

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FINC20018 Managerial Finance (FINC20018)

   

Added on  2020-05-28

FINC20018 Report on Finance - CQU printers

   

FINC20018 Managerial Finance (FINC20018)

   Added on 2020-05-28

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Running Head: Finance1Project Report: Finance
FINC20018 Report on Finance - CQU printers_1
Finance2ContentsIntroduction.......................................................................................................................3Part A................................................................................................................................4Initial investment..........................................................................................................4Operating cash inflows.................................................................................................5Terminal cash flow.......................................................................................................7Part B................................................................................................................................7Relevant cash flow stream:...........................................................................................7Part C................................................................................................................................9Payback period..............................................................................................................9Net present value........................................................................................................10Internal rate of return..................................................................................................11Past D..............................................................................................................................12Draw the graph...........................................................................................................12Part E..............................................................................................................................12Conflicting ranking of projects...................................................................................13Recommendation........................................................................................................13Part F...............................................................................................................................13Recommendation........................................................................................................13Conclusion......................................................................................................................14References.......................................................................................................................15
FINC20018 Report on Finance - CQU printers_2
Finance3Introduction:This report has been prepared on a case study which explains about a company CQU printers. This company is managing its operations through an old printer but the new managing director of the company has suggested to the company to make few changes into its current machinery and replace the machineries with new printer. Further, in this report, thecash flows of new printers have been evaluated and it has been found that which proposal is the best option for the company (Brown, Beekes & Verhoeven, 2011). Capital budgeting techniques makes it easy for the companies to evaluate 1 or more investment proposal easily. Following is the exact case:Production units $ 50,000 Old PrinterInstalled cost $ 4,00,000 Life5YearsSales value after 3 years $ 4,20,000 Sales value after 5 years $ 1,50,000 Current book value $ 1,16,000 New Printer (A)Installed cost $ 8,70,000 Life5YearsSales value after 5 years $ 4,00,000 Book value after 5 years $ 43,500 New Printer (B)Installed cost $ 6,60,000 Life5YearsSales value after 5 years $ 3,30,000 Book value after 5 years $ 33,000
FINC20018 Report on Finance - CQU printers_3
Finance4Tax rate30%Cost of capital14%Profit before depreciation and taxes for CQUprintersYearOld printerPrinter APrinter B11200002500002100002120000270000210000312000030000021000041200003300002100005120000370000210000Part A:In this part, the initial investment, operating cash inflows and terminal cash flows of both the projects have been calculated:Initial investment:The below table explain that the initial investment of printer A is $ 4,50,000 and initial investment of project B is $ 2,40,000 which explain that the investment of printer B is quite lesser. Calculation of initial investment New Mach (A)New Mach (B)Installed cost $ 8,70,000 $ 6,60,000 Less: Selling Price $ 4,20,000 $ 4,20,000 Initial Investment $ 4,50,000 $ 2,40,000 (Atrill & McLaney, 2006)W.N:Calculation of current net profit
FINC20018 Report on Finance - CQU printers_4

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