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Sample Assignment on Finance PDF

   

Added on  2021-05-31

16 Pages2456 Words85 Views
Running head: FINANCEFinanceName of the Student:Name of the University:Author’s Note:

FINANCE1Executive SummaryAs per the requirement of the assignment, there are two parts which are needed to bedone which are Part A and Part B. Part A of the assessment will be dealing with the businessexpansion of Saturn Pet care which is thinking of establishing new production site for dog foodproducts production. The assessment will be analysing the options which are available with themanagement of the company which will be done with the help of capital budgeting techniques.The selection of the favourable option will be on the basis of results of the capital budgetinganalysis. Part B of the assignment will be analysing the capital structure of ARB ltd and alsocompare the performance of ARB ltd with other financial business.

FINANCE2Table of ContentsPart A...............................................................................................................................................3Product Cannibalization...............................................................................................................5Excessive Sales recorded.............................................................................................................5Inclusion of Original Cost of Plant in NPV Analysis..................................................................5Part B...............................................................................................................................................6Introduction..................................................................................................................................6Discussions..................................................................................................................................6Capital Structure and Cost of Capital..........................................................................................6Comparison between ARB Ltd and Modine ltd..........................................................................8Financial Ratio of ARB Ltd.........................................................................................................9Change in Capital Structure.......................................................................................................11Wealth Maximization Principle.................................................................................................12Recommendations..........................................................................................................................13Conclusion.....................................................................................................................................13Reference.......................................................................................................................................14

FINANCE3Part A Particulars012345678910Initial Investment:Construction on Manufacturing Unit-$275,00,000Factory Building-$80,00,000Infrastructure Grant$25,00,000Total Initial Investment-$330,00,000Operational Cash Flow:Sales Growth Rate10%10%10%10%10%10%10%10%10%MAC30%30%30%30%30%30%30%30%30%30%Annual Sales$300,00,000$330,00,000$363,00,000$399,30,000$439,23,000$483,15,300$531,46,830$584,61,513$643,07,664$707,38,431Conversion Cost-$210,00,000-$231,00,000-$254,10,000-$279,51,000-$307,46,100-$338,20,710-$372,02,781-$409,23,059-$450,15,365-$495,16,902Rebate on Municipal Rate$5,00,000$5,00,000$5,00,000$5,00,000$5,00,000$5,00,000$5,00,000$5,00,000$5,00,000$5,00,000Depreciation on Plant & Equipment-$27,50,000-$27,50,000-$27,50,000-$27,50,000-$27,50,000-$27,50,000-$27,50,000-$27,50,000-$27,50,000-$27,50,000Depreciation on Building-$3,20,000-$3,20,000-$3,20,000-$3,20,000-$3,20,000-$3,20,000-$3,20,000-$3,20,000-$3,20,000-$3,20,000Net Profit before Tax$64,30,000$73,30,000$83,20,000$94,09,000$106,06,900$119,24,590$133,74,049$149,68,454$167,22,299$186,51,529Less: Income Tax @ 30%-$19,29,000-$21,99,000-$24,96,000-$28,22,700-$31,82,070-$35,77,377-$40,12,215-$44,90,536-$50,16,690-$55,95,459Net Profit after Tax$45,01,000$51,31,000$58,24,000$65,86,300$74,24,830$83,47,213$93,61,834$104,77,918$117,05,610$130,56,070Add: Depreciation on Plant$27,50,000$27,50,000$27,50,000$27,50,000$27,50,000$27,50,000$27,50,000$27,50,000$27,50,000$27,50,000Add: Depreciation on Building$3,20,000$3,20,000$3,20,000$3,20,000$3,20,000$3,20,000$3,20,000$3,20,000$3,20,000$3,20,000After-Tax Cash Flows$75,71,000$82,01,000$88,94,000$96,56,300$104,94,830$114,17,213$124,31,834$135,47,918$147,75,610$161,26,070Net Cash Flow-$330,00,000$75,71,000$82,01,000$88,94,000$96,56,300$104,94,830$114,17,213$124,31,834$135,47,918$147,75,610$161,26,070Cumulative Cash Flow-$330,00,000-$254,29,000-$172,28,000-$83,34,000$13,22,300$118,17,130$232,34,343$356,66,177$492,14,095$639,89,705$801,15,775Discount Rate22%22%22%22%22%22%22%22%22%22%22%Discounted Cash Flow-$330,00,000$62,05,738$55,09,944$48,97,987$43,58,845$38,83,079$34,62,590$30,90,412$27,60,539$24,67,783$22,07,650Payback Period (in years)3.863Net Present Value$58,44,567Profitability Index1.177YearsCapital Budgeting Analysis for Bathurst Site:Figure 1: (Image Showing Capital Budgeting Techniques for Bathurst Site)Source: (Created by Author)

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