Analysis of Funding for Zylla Limited's Ferry Acquisition Project

This report, prepared for Zylla Limited, a company providing ferry services, analyzes the financial aspects of acquiring a new ferry to meet increased demand. The report begins by examining short-term and long-term funding sources, including crowd funding, angel investors, equity shares, and venture funding. It then evaluates various investment appraisal techniques such as Accounting Rate of Return (ARR), Net Present Value (NPV), Internal Rate of Return (IRR), and Discounted Payback Period (PBP), to determine the viability of the acquisition. The report includes a detailed NPV calculation and concludes that the main purpose of business is to achieve success by supplying qualitative products and services at least-cost effectiveness for attracting large number of customers.

Business
Individual
Report

Table of Contents
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
1. Analyse short and long term sources of finance to fund the acquisition of ferry for
company’s working capital.....................................................................................................3
2. Evaluate various investment appraisal techniques and recommend viability of acquisition
and operation for new ferry....................................................................................................4
CONCLUSION..........................................................................................................................5
REFERENCES...........................................................................................................................6

INTRODUCTION
Business is the activity of manufacturing goods with improved quality and services to
meet the requirements of customers for providing them high level of satisfaction. This creates
opportunity for growth and stability of business by competing with its rivalries to sustain in
global market. This project is based upon Zylla Limited Company for facilitating ferry
services through crossing rivers by human beings, vehicles and equipments (Doda, 2014).
This project analyse short and long term funding sources of finance to fund the acquisition of
ferry for company’s working capital. Additionally, it evaluates various investment appraisal
techniques and recommends viability of acquisition and operation.
MAIN BODY
1. Analyse short and long term sources of finance to fund the acquisition of ferry for
company’s working capital
Short-term sources of finance:- This is defined as the funding source for minimum
period from one to three years. As being the finance manager of Zylla Limited Company
these short term funds mostly take exposure only in quality companies. It is recognized as the
proven capacity for recording or repaying loans on time as well as has sufficient cash flow
from business operations.
 Crowd Funding:- It is also known as crowd sourcing as a method to fund money on projects
by raising small amount from large number of people through internet. As being the finance
manager of Zylla Limited it is considered as the use of small capital to finance new business
venture for sustaining in global market (Myers, 2019).
 Angel Investor:- This investors are described as the persons who invest their money in new
or small business venture by providing capital for start-up or expansion. As being the finance
manager of Zylla Limited, the angel investor funds with spare cash available to them in order
to reduce risk by generating higher rate of return than would be given by more traditional
investments.
Long-term sources of finance:- It is described as the funding source of company in
borrowing money for maximum period of ten years. The Venture capitalists provide equity and other
types of long-term funds to unlisted companies. As being the finance manager of Zylla Limited
Company these funds includes equity share, preference capital, retained earnings, debentures
bank loan, venture funding, asset securitisation, etc.
 Equity Shares:- This represents interest-free perpetual capital of the company raised
by public or private routes. The companies can raise their funds either through
increasing IPO prices or providing substantial amount of stake in company. As being
the finance manager of Zylla Limited as equity holder have no preferential right in
dividend of company and carry higher risk across all buckets.
 Venture Funding:- It is a form of private equity financing the venture capital firms
or funds to start-up business and emerging companies that have been deemed to have
potential growth to sustain in perfect competition market (Picciotto, 2017). As being

the finance manager of Zylla Limited this venture capital provides funds for business
at various stages or funding rounds in global market.
2. Evaluate various investment appraisal techniques and recommend viability of acquisition
and operation for new ferry
The investment appraisal techniques which are recommended viability of acquisition
and operation for new ferry are as follows:-
 Accounting Rate of Return (ARR):- This is an accounting technique used to
measure expected profit from an investment. It is described as the net accounting
profit from the investment as a percentage of that capital investment. It is also known
as return on investment or return on capital (Wang, 2014). As being the finance
manager of Zylla Limited, the company is advantageous as many years of gains can
minimise the impact of single year loss.
ARR = Average Net Income
Average Investment
 Net Present Value (NPV):- It is described as the difference between present value of
cash inflow and outflow over a period of time. This is mainly dependent on
discounting rate of project and accounts for time value of money. As per being the
finance manager of Zylla Limited, the company is profitable as used in capital
budgeting and investment planning for analysing the profitability of project
investment.
NPV = PV (cash inflow) – PV (cash outflow)
 Internal Rate of Return (IRR):- This is a measure of an investment’s rate of return
which is referred in calculation of external factors such as risk-free-rate, inflation, the
cost of capital, etc. It is also called discounted cash flow rate of return. As per being
the finance manager of Zylla Limited, the company is helpful in capital budgeting as
to estimate the profitability of potential investments. It is further used to evaluate the
attractiveness of a project or investment (Ward, 2016).
 Discounted Payback Period Method (PBP):- It is one of the simplest investment
appraisal techniques which states that how long a project will take to generate
sufficient cash-flow to cover the initial cost of project. As being the finance manager
of Zylla Limited, the company is beneficial for easy and simple calculation which
ignores the time value of money and anything that happens after payback period.
Calculation of the Net Present Value for Zylla Limited Company is as follows:-
Years Discounting Rate @ 3% Cash Inflow Present
Value
Discounting Pay Back
Period (PBP)
1. 0.971 55,230 53,628.33 53,628.33
2. 0.943 70,045 66,052.44 119,680.77
3. 0.915 88,374 80,863.13 200,543.90
4. 0.888 79,870 70,924.56 271,468.46
5. 0.863 57,585 49,669.97 321,138.43
5. 0.863 45,000 38,835.00 359,973.43
Total 359,973.43

NPV = PV (cash inflow) – PV (cash outflow)
= 359,973.43 – 150,000
= 209,973. 43
Therefore,
Net Present Value for managers of Zylla Limited is 209,973.43
CONCLUSION
From the above discussion it have been concluded that the main purpose of business
is to achieve success by supplying qualitative products and services at least-cost effectiveness
for attracting large number of customers. This project analyse short and long term funding
sources of finance to fund the acquisition of ferry for company’s working capital.
Additionally, it evaluates various investment appraisal techniques and recommends viability
of acquisition and operation.

REFERENCES
Books and journal
Doda, B., 2014. Evidence on business cycles and CO2 emissions. Journal of
Macroeconomics. 40. pp.214-227.
Myers, M. D., 2019. Qualitative research in business and management. Sage Publications
Limited.
Picciotto, S., 2017. Rights, responsibilities and regulation of international business.
In Globalization and International Investment. (pp. 177-198). Routledge.
Wang, H. C., 2014. Distinguishing the adoption of business intelligence systems from their
implementation: the role of managers’ personality profiles. Behaviour & Information
Technology. 33(10). pp.1082-1092.
Ward, J., 2016. Perpetuating the family business: 50 lessons learned from long lasting,
successful families in business. Springer.