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Corporate Finance Assignment

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Added on  2019-12-28

Corporate Finance Assignment

   Added on 2019-12-28

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Corporate Finance
Corporate Finance Assignment_1
Table of ContentsINTRODUCTION ..........................................................................................................................31. Preparing a cash flow forecast of Wonderpump .....................................................................32. Assessing the proposed investment by using the capital budgeting tools ..............................53. Critically evaluate the investment appraisal techniques .........................................................64. ..................................................................................................................................................8a. Performing a sensitivity analysis or calculation ......................................................................8b. Giving comment on Gunther .................................................................................................95. Reassessing the Wonderpump investment.............................................................................116. ...............................................................................................................................................12A. Merits of debt and equity financing......................................................................................12b. Assessing the impact of discount rate on AGT’s structure .................................................12CONCLUSION .............................................................................................................................13REFERENCES .............................................................................................................................14
Corporate Finance Assignment_2
INTRODUCTION Corporate finance lays more emphasis on increasing value of firm to the shareholders.This field of finance makes more focus on effective allocation of the financial resources whichaid the growth and success of firm. Besides this, corporate finance also focuses on thedeveloping highly suitable financial structure that makes contribution in the attainment oforganizational goals and objectives. The present report is based on the case situation of AGT Plcwhich is a large sized chemical and engineering business organization. Further, it is also listed onthe recognized stock exchange of London. Hence, the present report will shed light cash positionof the firm. Besides this, it will also provide deeper insight about the extent to which investmentappraisal tools and sensitivity analysis assists in making suitable decision.1. Preparing a cash flow forecast of Wonderpump Cash flow statement furnishes information regarding the revenue generated by the firmduring the specified time frame. Besides this, it also provides deeper insight regarding theamount invested by the firm for performing the business activities and functions (Damodaran,2016). This in turn provides information to the business unit about net cash flow position oraspects and thereby assists in making suitable decision. Cash flow of AGT Plc from 2012 to 2021 are enumerated below:PARTICULAR 2012201320142015201620172018201920202021VOLUME(UNITS)200300500600500400250150SALES PRICE12,00012,0008,000 80008000800080008000SALES 2,400,000 3,600,000 4,000,000 4,800,000 4,000,000 3,200,000 2,000,000 1,200,000 COST OF SALE5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 TOTAL COSTOF SALE-1,000,000 -1,500,000 -2,500,000 -3,000,000 -2,500,000 -2,000,000 -1,250,000 -750,000 SUB TOTAL 1,400,000 2,100,000 1,500,000 1,800,000 1,500,000 1,200,000 750,000 450,000
Corporate Finance Assignment_3
SALESREPRESNTATIVE-250,000-250,000-100,000-100,000-100,000-100,000-100,000-100,000TECHNICALSUPPORT-150,000-150,000-50,000-50,000-50,000-50,000-50,000-50,000TOTAL(B) 1,000,000 1,700,000 1,350,000 1,650,000 1,350,000 1,050,000 600,000 300,000 TAX -300,000 -510,000 -405,000 -495,000 -405,000 -315,000 -180,000 -90,000 TOTALOPERATINGCASH FLOW 1,000,000 1,400,000 840,000 1,245,000 855,000 645,000 285,000 120,000 -90,000 INVESTMENTCASHINFLOW(CAPEX)-800,000INVENTORIES(FG)-50,00050,000INVENTROIESRAWMATERIALS-300,000-450,000-750,000-900,000-750,000-600,000-375,000-225,000change-300,000-150,000-300,000-150,000150,000150,000225,000150,000225,000TRADERECEIVEABLES-394,521 -591,781 -657,534 -789,041 -657,534 -526,027 -328,767 -197,260 CHANGE -394,521 -197,260 -65,753 -131,507 131,507 131,507 197,260 131,507 197,260 TRADEPAYABLES49,315 73,973 123,288 147,945 123,288 98,630 61,644 36,986 CHANGE 49,315 24,658 49,315 24,658 -24,658 -24,658 -36,986 -24,658 -36,986 NET CASHFLOWS-1,495,205 677,397 1,083,562 583,151 1,501,849 1,111,849 1,030,274 541,849 555,274 -90,000 From the above cash flow statement it has been assessed that during the period of 10years cash flow of Gunther’s Wonderpump is showing fluctuating trend. In 2014, 2016, 2017
Corporate Finance Assignment_4

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