Evaluation of Sources for Operational and Acquisition of Ferry Needs

This report discusses the evaluation of sources required for fulfilling operational and acquisition of ferry needs. It explores the capital budgeting techniques used for decision making and identifies the short term and long term sources of financing for purchasing a new ferry. The net present value of the project is calculated, and the final decision to purchase the ferry is made based on the analysis.

BUSINESS DECISION
MAKING

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Evaluation of sources required to fulfil operational and acquisition of ferry needs....................1
Calculation of net present value of the project............................................................................1
Final decision...............................................................................................................................1
CONCLUSION................................................................................................................................1
REFRENCES...................................................................................................................................1

INTRODUCTION
Every business organizations needs to take decision regarding their future activities in order
to expend their business and maintain their position in market, for this purpose managers use
capital budgeting techniques, which will help in determining the best alternative among
others. To recognize the conception of decision making Zylla limited has been selected. This
organization runs their business in serving river crossing facilities thorough their ferries for
personals and their goods and vehicles. This report briefly described types of source
required for fulfilling financial needs and technique of capital budgeting using for take
decision regarding acquisition of ferry.
TASK 1
Evaluation of sources required to fulfil operational and acquisition of ferry needs
Capital budgeting: It is a process of taking decision regarding long term financial decision for
business organization. Capital budgeting is also term as investment decision making procedure;
in which manager use various methods in order to recognize the future profitability value, cost of
alternative future cash inflow. On the basis of all the factors manager able to take decision
regarding which alternative provides help in generating more revenue or decision regarding
accepting or rejecting he acquisition of, long term assets for expansion of business operations.
Following are the sources Zylla limited require for purchasing new ferry:
Short term funds: Theses included those factors or source which help in fulfils day to day needs
and expenses of ferry, maintenance expenses of ferry, service charge of ferry etc. Short term
funds used to fulfil working capita l requirements following are the short term funds, these are
taken for less than one year(Sarwary, 2020).

Short term loan: Zylla limited take short term loan from banks. Theses loan is provided by
banks for less hen one year, it will help the organization to fulfil their operations day needs.
Bank deposited: These are the saving organization take for their reserve; manager will take
money from bank deposits to acquisition of ferry. This amount use to provide facties during the
rivers service to passengers, regarding foods and beverages.
Account receivables: The amount customers liable to pay their firm for using their services and
products. Zylla limited use amount of account receivable to buy ferry it will help in contribute
small part for purchasing of ferry.
Factoring: This short term tool used when company required urgent source of money they slss
their debtor receivable to third part at discounted rate for fulfil their financial needs.
From the source of short term fiancé manager of Zylla limited will be able to pay all the
expenses charge during using of ferry in day to day operations.
Long term source of financing: It consider those sources of fiancé which required high amount
of capital and theses source provides long term benefits to the business entity. Long term source
of fiancé used to purchase fixed assets, payment of loans, purchasing of building, land, and
acquisition or merger with firms to expand business. For buying ferry Zylla limited required to
collect long term funds from various sources:
Share capital: Business entities gain monetary fund’s by issue of shares. Shareholders are the
real owner of the company as they contribute their part to fulfil financial requirement of
organization. By issuing shares of Zylla limited the management department will be able to
purchase ferry(Saleh, N., and et.al. 2014).
Long term loan: Company needs to pay dividend to their shareholders when thy earn revenue,
for saving of reserve they can take loan from banks and other financial institutions for buying
ferry,. On taking of loan they need to pay interest to bank. But organization will be able to
purchase ferry.
Debenture: It can be defined as an instrument issued by business organization under their
common seal which is sign of contract between debenture holders and company. Zylla limited
can collect monetary funds by issue of debenture. But this source creates liability on the firm.
Sell off assets: It is one of the most useful sources to collect the source of finance. Manager of
Zylla limited can sale their long term or foxed assets to increase their internal capital it will help

in collecting of financial funds without payment of interest and dividend to shareholders or
debenture holder or bank. By selling assets Zylla limited can purchase ferry for their business
operations.
Calculation of net present value of the project
Year Cash flow Discount factor Present value of
net cash flow
1 55230 0.971 53628.33
2 70045 0.943 66052.43
3 88375 0.915 80863.12
4 79870 0.888 70924.56
5 57555 0.863 49669.96
6 45000 0.863 38835
total 359973
Net present value: Cost of investment – Value of present cash flow =
Net present value: 150000 - 359973 = 209973
Final decision
From the computation of capital budgeting , net present value method it can be identifies that the
future cash flow of ferry is much more than the cost of acquisition of the ferry thus Zylla limited
would accept the decision to purchase ferry for expansion of their river driving business. It will
help in generating profit in future and increase the number of customers and provides them
facilities(Mohamed and Kamal, 2015).
CONCLUSION
From this report it has-been concluded that to take better decision regarding financial which
helps in growth in business entity require to use capital budgeting framework, they needs
share capital, debenture, bank deposits, loans, ,and various short ten as well as long term
source to fulfil their financial needs. On the basis of capital budgeting techniques analysis

organization will be able to select the best option and choose whether decision is profitable
and non profitable for future expansion and then use source of funds to buy or quire assets in
order to expend their business operations.

REFRENCES
Books and journals
García, D., 2014. Optimal contracts with privately informed agents and active principals. Journal
of Corporate Finance, 29, pp.695-709.
Sarwary, Z., 2020. Strategy and capital budgeting techniques: the moderating role of
entrepreneurial structure. International Journal of Managerial and Financial
Accounting, 12(1), pp.48-70.
Saleh, N., Rosati, S., Sharawi, A., Wahed, M. A. and Balestra, G., 2014, December. Application
of quality function deployment and genetic algorithm for replacement of medical
equipment. In 2014 Cairo International Biomedical Engineering Conference
(CIBEC) (pp. 91-94). IEEE.
Mohamed, A. and Kamal, M., 2015, October. e-Learning Capital Budgeting Decision Models: A
Comparative Analytical Study. In 2015 Fifth International Conference on e-Learning
(econf) (pp. 231-236). IEEE.
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