Project Risk, Finance, and Monitoring

The study helps Apple Inc. to understand the different levels of measures that could be adopted for improving their project selection, cost management, funding, implementation and winding up situations.

Running head: PROJECT RISK, FINANCE, AND MONITORING
Project risk, finance, and monitoring
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

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PROJECT RISK, FINANCE, AND MONITORING
Table of Contents
Executive Summary:........................................................................................................................2
Part A:..............................................................................................................................................2
i) Project Selection:..........................................................................................................................2
ii) Cost management:.......................................................................................................................3
iii) Funding:.....................................................................................................................................3
iv) Implementation and winding up:................................................................................................4
Conclusion and recommendations:..................................................................................................5
Part B:..............................................................................................................................................5
Answer to a:.....................................................................................................................................5
Answer to bi:....................................................................................................................................7
Answer to bii:..................................................................................................................................7
Answer to biii:.................................................................................................................................8
Answer to biv:..................................................................................................................................8
References and Bibliography:..........................................................................................................9

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PROJECT RISK, FINANCE, AND MONITORING
Executive Summary:
The study helps Apple Inc. to understand the different levels of measures that could be
adopted for improving their project selection, cost management, funding, implementation and
winding up situations.
Part A:
i) Project Selection:
There are specific methods in which organizations are able to select adequate investment
options, which can improve their revenues in the long-term. The major methods that are used by
companies present in technological sector are from investment appraisal techniques such as net
present value, payback period, and internal rate of return. These identified techniques are
relatively used by organizations for identifying the most valuable investment option, which can
minimize the level of risk involved in investment and maximize total returns. Investment
appraisal techniques and adequate measure, which is used by analyst for detecting the time, value
of money, as it adequately evaluates the future cash flows on present date (Sadgrove 2016).
Apple Inc. being in the technological sector can adequately utilize the above investment
appraisal techniques for effectively securing the projects that yield higher returns in the long run.
The companies in technological industry directly rely on futuristic products, whose overall
analysis needs to be conducted for identifying its financial viability to support future revenues of
the organization. Thus, investment appraisal techniques allow the companies to identify the

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PROJECT RISK, FINANCE, AND MONITORING
financial viability of the future product by comparing the revenues and expenses that can be
generated over the period of time.
ii) Cost management:
One of the effective measures used by organizations in the technological sector is the first
management techniques, which adequately helps in reducing the level of expenses that could be
associated with a particular project. The cost management technique such as budget planning,
time management and time tracking directly allows organization to understand the level of
expenses and its nature. This analysis literally allows the organization to detect ways in which
the cost could be minimized, which eventually support the financial viability of an organization.
Thus, after detecting the relevant cost for technological sector companies can adequately select
the most appropriate investment option that can manage the revenue generation capability of the
organization (Hall, Mikes and Millo 2015).
With the help of Cost Management techniques, Apple Inc. could adequately improve the
cost management conditions of project and reduce the level of expenses that could be hampering
their profit level. The measures such as budgeting would eventually allow Apple Inc. to allocate
resources and minimize wastage. Hence, the adoption of cost management techniques would
eventually benefit the financial performance of Apple Inc., while minimizing any kind of risk.
Therefore, Apple Inc. could adequately minimize the risk from investment, by adopting the
different levels of cost management techniques.

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PROJECT RISK, FINANCE, AND MONITORING
iii) Funding:
The major source of funding that is available to organizations are equity financing and
debt financing, as it is more reliable and available to companies. One of the best ways of getting
the required level of funding is from equity financing, as it reduces the level of insolvency
conditions that is faced by an organization. With the help of equity financing, the organization is
not liable to pay fixed finance cost on yearly basis, whereas debt financing of fixed amount of
Finance cost needs to be paid regardless of the income generated by the organization (Minnis
and Sutherland 2017).
There are two possible sources of finance that is available to Apple Inc. one is equity
financing another is debt financing. Therefore, it is the management’s decision to identify the
best possible sources of finance that could be used by the organization to support the future
projects. However, the analysis directly indicated that using equity financing would be much
beneficial for Apple Inc. as it will maintain the level of solvency condition and reduce any
chances of increment in finance cost. Therefore, using the debt financing would increase the
finance cost and reduce the level of profits, which could be generated from operations.
iv) Implementation and winding up:
The analysis directly indicated that assumption made for the initial project is considered
to be a major issue if adequate Research and not conducted by organization before implementing
the project. the overall cash flows that has been evaluated as per the research needs to be
accurate and appropriate in nature as the results from investment appraisal techniques are
dependent on the cash inflows and outflows. Hence, the financial viability of the project is
directly based on the overall assumptions and data that have been created by the manager for the

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PROJECT RISK, FINANCE, AND MONITORING
particular project. Thus, Apple Inc. could directly utilize the relevant measure for ensuring high
level of anticipation of the project, as it is viable for generating feasible stats from the investment
appraisal techniques. Hence, Apple Inc. management could make relevant decisions on the
financial viability of the project and secure the investment capital. After completion of the
project, the relevant winding up process directly starts where the organization sells all the
relevant assets and requires a required Salvage value to support the cash inflows at the end of the
project life. Adequate environmental damages are conducted after the project is completed, as
the company starts a new project, where relevant restructuring of the landscape is steered
(Hopkin 2018).
Conclusion and recommendations:
Apple Inc. could directly utilize the above information regarding the selection process,
and adequate costing management process to detect the most viable investment option, which
could generate higher revenue for the organization.
Part B:
Answer to a:
The case study does not point out that Apple Inc. could be raising equity capital any time
soon, whereas the company is facing problems with its forecasted revenues, as relevant discounts
are being imposed to generate sales.
In addition, the companies use equity financing on the occasions, where they intend to
acquire capital for further improving their current operational capability. In addition, equity

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PROJECT RISK, FINANCE, AND MONITORING
financing is the best way to fund the financial requirement of organizations, as it does not
increase insolvency positions, which is conducted by debt.
Figure 1: Apple Inc. share price in 2019
(Source: Finance.yahoo.com 2019)
The share price has seen weakness during May of 2019, as depicted in the above figure.
However, the share price of Apple Inc. has been increasing since January 2019 and has reached a
high of $215.31 with a low for the year of $154.23. Therefore, it could be understood that the
share price performance of Apple Inc. is appropriate for the financial year of 2019.

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PROJECT RISK, FINANCE, AND MONITORING
Answer to bi:
The calculation has directly indicated about the overall cash flows that could be
generated from the project over the duration of four years. The analysis has directly indicated
that total cash outflow will be at the levels of -$5.03 million, while cash inflow for year 4 is at
the $3.263 million and $1.223 million from year 1 to 3 each.
Answer to bii:

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PROJECT RISK, FINANCE, AND MONITORING
The calculation has indicated that investment in the project will be a viable option for
Apple Inc., as the NPV value is positive, which indicates that the investment will provide higher
revenues in the long run. The NPV has been calculated to be at the levels of $264,961.41, which
indicates that positive ash flow will be generated in future (Danthine and Donaldson 2014).
Answer to biii:
The analysis has directly indicated that investment in the project is viable, as NPV is
positive.
Answer to biv:
From the analysis, it could be understood that equity financing is the cheapest, as
organization can chose to not pay any kind of dividends to the investors during the financially
low years. Thus, the cost of capital will alter to the interest level of the bond, where any
alterations in the values above 12% will make the project unviable.

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References and Bibliography:
Angeloni, I., Faia, E. and Duca, M.L., 2015. Monetary policy and risk taking. Journal of
Economic Dynamics and Control, 52, pp.285-307.
Bowers, J. and Khorakian, A., 2014. Integrating risk management in the innovation
project. European Journal of innovation management, 17(1), pp.25-40.
Danthine, J.P. and Donaldson, J.B., 2014. Intermediate financial theory. academic press.
Diebold, F.X. and Yılmaz, K., 2015. Financial and macroeconomic connectedness: A network
approach to measurement and monitoring. Oxford University Press, USA.
Finance.yahoo.com. 2019. Yahoo is now part of Oath. [online] Available at:
https://finance.yahoo.com/quote/AAPL?p=AAPL [Accessed 3 Jun. 2019].
Hall, M., Mikes, A. and Millo, Y., 2015. How do risk managers become influential? A field
study of toolmaking in two financial institutions. Management Accounting Research, 26, pp.3-
22.
Hopkin, P., 2018. Fundamentals of risk management: understanding, evaluating and
implementing effective risk management. Kogan Page Publishers.
Minnis, M. and Sutherland, A., 2017. Financial statements as monitoring mechanisms: Evidence
from small commercial loans. Journal of Accounting Research, 55(1), pp.197-233.
Sadgrove, K., 2016. The complete guide to business risk management. Routledge.