University of Tasmania BFA728 Finance Risk and Return Analysis

This assignment analyzes the risk and return associated with investment decisions, focusing on a case study involving Sparta Impressions (SI). The report evaluates two printers based on payback period, net present value (NPV), and internal rate of return (IRR). The assignment further explores private equity investments, including venture capital, growth equity funds, and leveraged buyout funds. It discusses the opportunities and risks associated with private equity, emphasizing the importance of financial planning and strategic management to mitigate risks and enhance business growth. The report concludes with recommendations for Zion's investment strategies, highlighting the need to balance leverage and diversify investments to attract potential investors and achieve financial success.

Running head: FINANCE
FINANCE
Name of the student:
Name of the university:
Author Note:

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Part 1......................................................................................................................................2
Answer to Question 1.........................................................................................................2
Answer to Question 2.........................................................................................................2
Answer to Question 3.........................................................................................................3
Answer to Question 4.........................................................................................................3
Answer to Question 5.........................................................................................................3
Part 2......................................................................................................................................4
Answer to requirement 1....................................................................................................4
Answer to requirement 2....................................................................................................5
Answer to requirement 3....................................................................................................6
Conclusion..................................................................................................................................6
References..................................................................................................................................7

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Introduction
The assignment actually deals with the risk and return analysis of the business used
for the purpose of taking the significant investment decisions. The risk which are involved in
this case along with the other parameters which are associated in this case must be taken into
consideration by the senior level management of the organization. Based on the variation of
the project the internal rate of return along with the net present value of the organization is
evaluated in order to understand the viability of undertaking the project of the organization.
The financial planning of the organization then takes place based on the current operations,
which actually takes place within the business, and related measures in that case are needed
to be adopted accordingly.
Discussion
Part 1
Answer to Question 1
The above calculation is made regarding the payback period for each of the printer
regarding the acceptability and relative which are the 4.38 years in case of the Printer A and
4.28 years in case of Printer B.
In terms of the relative ranking of both the project the Organization B is quite ahead
to that of the Organization A in terms of the payback period of the organization.

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Answer to Question 2
Answer to Question 3
The ranking in this case is quite controversial based on the evaluation techniques
which is shown in the question 2. However, in case of Printer A the net present value is quite
higher than the printer B and in such a situation the management will take the decision to
accept the printer A. The Ranking of both the printer is quite conflicting and in that case, it is
quite difficult for the management to make the significant decision (Arcand, Berkes and
Panizza 2015).
Answer to Question 4

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$(200,000)
$(100,000)
$-
$100,000
$200,000
$300,000
$400,000
$500,000
Net Present Value Profile
NPV A
NPV B
Discount Rate
Net Present Value

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Based on the value of the NPV profile and IRR it is quite controversial to decide upon
the facts and numbers where the NPV of Printer A is higher compared to that of the Printer B.
However, in terms of the payback period the Printer B is quite better than Printer A as the
payback period is less in case of Printer B in comparison to Printer A (Gitman, Juchau and
Flanagan 2015).
Answer to Question 5
The NPV of the project is considered as the main factor and on the basis of that
comparison the other factors such as the IRR and the payback period is not considered in
such circumstances. It will be better for the management system of the organization to accept
the printer A and the other factor are quite considerable which are the IRR and the payback
period. Certainly, based on the factors which are both the theoretical and practical it will be
right decision for the management of the organization to accept project A.
Part 2
Answer to requirement 1
Zion investment in the private equity will further help the size of the business to grow
or rather enlarge the business of the organization. The investors of the organization must
diversify the investment strategies in order to generate huge return out of it. The public makes
investment in the private equity fund which will assists the business of the organization to
prosper in the future and will further help the business of the organization to generate return
out of it. In order to make the venture capital successful it is important for the business to
make the management buyout.
The investment in the private equity rather means that making investment in various
equity class so that the organization can minimize the return in the business. The risk must be
ascertained by the upper level management of the organization in order to make the potential

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investment along with the calibration of the leverage associated with the business. If the
financial performance of the business is satisfactory then the equity investors in that case will
further invest in the private equity.
The investments in the global private equity depends on the current status of the
economy and the other aspects which are associated with it. The fluctuation in the economy
puts a definite impact on the business performance of the organization. It falls under the
accountability of the organization to understand the major ups and downs in the economic
situation and the decisions which is taken by the management must be taken into
considerations along with the parameters which are associated with it (Cochrane 2017).
In such a situation it is important for the organization to generate return out of the
investments and also keep the positive flow in working capital of the organization. It is
needed for the organization to adopt some of the significant strategy so that the organization
will be able to enhance the overall business facets of the organization. In case of the
investment in the private equity of the strategies of investment are different varies based on
the investors. This actually creates definite impact in the business of the organization along
with the other positive and negative factors which are associated with it. Sometimes the
expectation in that case doesn’t match the expected outcome in the business.
Answer to requirement 2
There are actually various types of private equity investments which are the venture
capital funds, growth equity funds and leverage buyout funds. The potential investors in that
case diversify their investments process to generate return out of it. The leverage buyout
funds actually controlling stakes which is actually mature cash flow stable companies the
transactions in that case actually involves the combinations of the debt or equity and the
proportion of the mixture actually depends on the various facts which are associated in that

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case (Fisher 2018). Most of the price earning ratio in that case involves the proportion of the
debt equity ratio of the organization which is actually 50% proportion in each of the cases.
The potential investors in that case must be careful at the time of the leverage buyouts as it
involves various kind of risk associated with it.
The venture capitals funds actually investment in the minority stakes in the start up
companies. The investment in the business actually takes place high growth sectors like
internet and the consumer technology. The enterprise operation must be effective along with
the contribution from the senior level management of the organization (Fracassi 2016). The
portfolio of the organization must be effective so that the organization can generate positive
return in the business. The various corporate functions in that case is seriously needed to deal
with the other aspects which are adjacently inclined with the purpose of the business.
The growth equity funds on the other hand is considered as one of the potential
business strategic investment which must be adopted by the organization at the time of
making the significant business investments. The growth of the fund is actually related to the
long-term growth of the business where the potential employees always seeks for the
significant opportunities which are actually involved in that case. The investors in the
business must also ascertain the potential risk which are associated with such kind of business
prospects of the firm (Pilbeam 2018).
Answer to requirement 3
There are some of the significant opportunities and risk which are actually involved in
the private equity investments of the organization. The investment in the private equity of the
organization will enable significant business growth and it will enhance the business growth
along with the performance of the organization to further understand the various dimension
of making profit in the business (Horst 2018). The opportunities of making further

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investments along with the potential growth of the organization in that case are also needed to
be undertaken by the management of the organization. There are also significant risks which
are associated with the business along with the other aspects of the business. The strategic
management of the organization in that case plays significant role in order to mitigate the risk
and threats in the buisness (Shoup 2017).
Conclusion
The ultimate conclusion which is drawn is that the organization which is Zion needs
to enhance the business prospects in order to attract the potential investors in the business. It
is the responsibility to make the private equity related investment to understand the strength
and weakness of the organization and accordingly it is needed to make the investment. The
investor on the other and must balance out the potential leverage which is associated with the
investment strategy of the investors in the market.

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References
Arcand, J.L., Berkes, E. and Panizza, U., 2015. Too much finance?. Journal of Economic
Growth, 20(2), pp.105-148.
Cochrane, J.H., 2017. Macro-finance. Review of Finance, 21(3), pp.945-985.
Fisher, R.C., 2018. State and local public finance. Routledge.
Fracassi, C., 2016. Corporate finance policies and social networks. Management Science,
63(8), pp.2420-2438.
Gitman, L.J., Juchau, R. and Flanagan, J., 2015. Principles of managerial finance. Pearson
Higher Education AU.
Horst, U., 2018. Introduction to Mathematical Finance.
Pilbeam, K., 2018. Finance & financial markets. Macmillan International Higher Education.
Shoup, C., 2017. Public finance. Routledge.