Strategic Financial Management

Running head: STRATEGIC FINANCIAL MANAGEMENT
Strategic Financial Management
Name of the Student:
Name of the University:
Authors Note:

STRATEGIC FINANCIAL MANAGEMENT
1
Table of Contents
Introduction:...............................................................................................................................2
1. Providing a detailed calculation of Net Present Value (NPV), Internal Rate of Return (IRR)
and Payback Period for projects Aspire and Wolf:....................................................................2
2.i) Providing a recommendation regarding which project to undertake:..................................2
2.ii) Justifications the recommendations:...................................................................................3
2.iii) Providing a summary of other factors that should be considered and information that
may be needed prior to making a final decision:.......................................................................5
3.i) Providing a description of Equity and Debt:.......................................................................7
3.ii) Providing an explanation of the costs of each source of finance:......................................8
3.iii) Analysing the effect of a source of finance on AYR Co.’s weighted average cost of
capital:........................................................................................................................................9
3.iv) Analysing the impact of the selection of finance on current and potential shareholders
and lenders:................................................................................................................................9
Conclusion:..............................................................................................................................10
References and Bibliography:..................................................................................................12
Appendices:..............................................................................................................................15

STRATEGIC FINANCIAL MANAGEMENT
2
Introduction:
The main aim of assessment is to evaluate two different projects for AYR Co and
provide relevant recommendations regarding the potential project that can increase their
income in the long run. The analysis of both projects Aspires and Wolf is a relatively
conducted on the basis of investment appraisal techniques such as net present value, internal
rate of return and payback period. The utilization of adequate investment appraisal techniques
would eventually help in segregating the most viable investment option and allow your
organization to generate the highest level of returns from investment. Furthermore, relevant
justification is conducted for the recommendations and identification of other factors that
needs to be understood before making the final decision. Moreover, the analysis and
discussion of equity and debt is a relatively conducted as one of the sources of finances that
can be used by the organization to fuel the selected project for investment.
1. Providing a detailed calculation of Net Present Value (NPV), Internal Rate of Return
(IRR) and Payback Period for projects Aspire and Wolf:
Refer to Appendix 1
2.i) Providing a recommendation regarding which project to undertake:
The analysis of both project Aspire and Wolf has relatively helped in detecting the
most viable investment option that can be used by the organization to generate the highest
level of return from investment. The analysis has portrayed that project Wolf is the most
viable investment option, as it has a positive NPV, a lower payback period and a higher
internal rate of return than project Aspire. The evaluation of the project is relatively based on
the overall income and the projected cash flows that have been generated for the period of 5