MBA643: Project Risk, Finance, and Monitoring Report - Apple Inc.

This report, created for an MBA643 course, analyzes project risk, finance, and monitoring, focusing on Apple Inc. and its technology projects. Part A of the report examines project selection processes, cost management techniques, funding strategies, and the winding-up procedures relevant to technology companies. It explores capital budgeting methods like Net Present Value (NPV), Internal Rate of Return (IRR), and payback period, as well as the impact of debt and equity financing. Part B conducts a capital budgeting analysis, evaluating Apple's financial performance, free cash flow, and NPV of proposed projects, with supporting financial data and graphical representations of share price movements. The analysis covers the company's financial health, potential for future growth, and the impact of management decisions on share prices and investor sentiment. The report uses financial data from 2019 to analyze the financial aspects of the company. The report concludes with recommendations for effective project risk management and financial strategies.

Running head: PROJECT RISK, FINANCE, AND MONITORING
Project Risk, Finance, and Monitoring
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

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PROJECT RISK, FINANCE, AND MONITORING
Table of Contents
Executive Summary:........................................................................................................................2
Part A:..............................................................................................................................................2
Implementing the selection of project by Technology Company by identifying the process:........2
Enhancing the project efficiency by evaluating the measures of cost management:.......................3
Evaluating the funding levels of Technology Company:................................................................3
Assessing the process of winding up and its implementation by the company:..............................4
Conclusion and recommendations:..................................................................................................5
Part B:..............................................................................................................................................5
Answer to question a:......................................................................................................................5
Answer to question bi):....................................................................................................................8
Answer to question bii:....................................................................................................................9
Answer to question biii:...................................................................................................................9
Answer to question biv:.................................................................................................................10
References list:...............................................................................................................................12

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Executive Summary:
The procedure adopted by the technological company for gauging the financial
performance so that a higher level of income is generated has been evaluated in the assessment.
It is evident from the analysis conducted that there can be improvement in the overall
performance of company with the utilization of the cost management, relevant section, winding
up, funding and enactment.
Part A:
Implementing the selection of project by Technology Company by identifying the process:
The procedure of conducting an analysis of adequate selection of project by the
technology companies is identified directly. Such selection of the project is done as it helps in
ensuring generation of high level of return. The financial feasibility of the project for the
companies operating in technology sector is determined by the technique of capital budgeting
such as net present value, internal rate of return and payback period. Net present value helps in
evaluating the viability of the project, as the present value of the future inflow of cash is
determined based on time value of money and the same is compared with the time value of
money. Using the payback period, the company would be able to identify the time that would be
taken by the project to generate the amount of money invested initially. Furthermore, internal
rate of return is another metric of capital budgeting that helps in estimating the profitability that
would be generated by the potential investment. The discount rate equates the net present value
of cash flow to zero is given by internal rate of return (Aversano 2016). Therefore, the process of

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selecting the project by the Apple Inc. is done by using all various investment techniques of the
advancement of the computation for determining the most economic viable investment option.
Enhancing the project efficiency by evaluating the measures of cost management:
In order to make an improvement in the project efficiency that incorporates the
technological factors, one important technique that is used by the organization is the measures of
cost management. There are several measures involves in the cost management that assists in
lowering the expenses that would be incurred in the completion of the project. Such measures
include planning of budget, time management and tracking of time, which helps in evaluating the
total expenses incurred and lowering it to the acceptable level. The future cash flow of the
projects associated with the expenses and income is analyzed by the organization using
budgeting techniques. In addition to this, using the method of tracking the time helps in assessing
the efficiency of the workforce that has been employed to complete the project. The opportunity
available by evaluating the different level of activities using the analysis of time management is
done by reducing the time taken to complete such activities and enhancing the level of
productivity. Therefore, for improving the efficiency in an adequate manner, it is required by the
organization to employ the required and relevant methods of cost management that would
ultimately contribute to increase the level of profits generated by the business.
Evaluating the funding levels of Technology Company:
There are different types of funding such as equity fund and debt financing that can be
used by the organizations in technology industry as they provide them great assistance in funding
requirements for completing the project. Companies can make use of both the methods that helps

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in increasing the finance cost level and supporting the project. Financing the project using debt
increases the fixed cost of financing by creating a direct impact on the insolvency position of the
company. On other hand, the solvency position of the project would remain confined if the
financing were done using equity capital. It is so because this method of finance helps in
reducing the cost of fixed finance and thereby increasing the profitability of the project by taking
adequate steps. Therefore, the profitability condition of the project might be negatively impacted
by the advantages and disadvantages of the methods of finances (Mohamed and Kamal 2015).
Therefore, from the analysis of both the methods of finances, it can be inferred that it would be
beneficial for the company to utilize the method of debt financing to fund their project. It is so
because the timely commencement of the project can be ensured by the adopting the method of
debt financing. Hence, it is recommended to Apple Inc. to employ the debt financing as it would
help the project to generate sufficient profits.
Assessing the process of winding up and its implementation by the company:
Prior to the initiation of the project, organization is required to have some prerequisites
such as conducting an in depth research that helps in evaluating the requirements and condition
of the project. The level of expenses that would be incurred and the revenue generated from the
investment undertaken by the company is analyzed by getting involved in research activities. It
can therefore be inferred that if the company is not engaging in sufficient research work, then
there exist the possibility of issues associated with the investment project. Managers might fail to
make feasible investment decisions if the wrong valuation and results is portrayed by the
techniques of appraising investment. Hence, it is considered crucial for the company or
organization to engage in the research of the project that they are intending to undertake so that

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they are able to evaluate the relevant and suitable techniques of investment appraisal and
according determining the profitability of the projects in the form of benefits (Imegi and
Nwokoye 2015).
Furthermore, the company in the event of life conducts the process of winding up or
tenure of the project has been completed. The overall expenditure of capital at the end of project
are clear off at the salvage value and the remaining amount is added to the project’s cash inflow.
In addition to this, in the process of winding up of the company, a direct damage on environment
is also done, as the future usage of landscape is alternated (Christiansen et al. 2015).
Conclusion and recommendations:
From the evaluation of all the facts associated with the techniques of investment appraisal
would help Apple in generating adequate level of profits and accordingly lowering the level of
risks of the projects undertaken. Therefore, the conditions of cost management, process of
selection and the problems of implementation in the Apple Inc would be secured by Apple Inc by
evaluating the process.
Part B:
Answer to question a:
The overall performance of organization is evaluated by analyzing the performance and
the Apple Inc. can evaluate the performance, which is an important aspect for the investors. It

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has been found from the analysis of the performance of Apple Inc. that there is sufficient level of
cash available for supporting the operations and hence the management of the company do not
intend to issue shares. It is clearly mentioned by the company that the discounts provided to the
customers forms the basis of determining the overall profits. Furthermore, it is also indicated
from the analysis of Apple Inc. from the analysis that it is not appropriate for the organization to
conduct the current level of sales. It is so because the sales volume affects the capability of the
company and this is done for ensuring that the adequate level of returns is available at the end of
financial year. The low level of revenue generated by Apple Inc. is alerted by the investors and
shareholders anticipation. It has been found that low level of revenue generated is attributable to
the discounts that are provided to the customers on the new line of products. The valuation done
by the analysts about the decline in the price of shares has resulted in the change in anticipated
level of revenue of Apple Inc. Since the management decision on the adoption of the share price
on product line is influences, the share price and the management did not intend to issue shares
(Albertijn et al. 2016).
The growth prospects of the company are directly affected by the equity finance and it is
when the operations and productivity is to be increased, the company should employ equity
finance and thereby supporting the future operations. Using the equity financing would not
contribute to increase the solvency position of the company (Abor 2017).

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Figure 1: Apple Inc share price.
(Source: Finance.yahoo.com 2019)
The graph presented above depicts the movement in the share price of Apple Inc for the
year 2019. The movement in the price of shares incorporates the actions taken by the
management that is relevant to the movement in the share price. It has been found from the
analysis of the share price of Apple Inc. that there has been a high level of growth. As on 3rd
January, 2019, the price of shares stood at $ USD 142.00 compared to the highest price of 211.84
on 3rd May, 2019. Therefore, from the trend of the share price, there has been higher and higher
lows during the year 2019. After achieving significant growth in the level of price, the decline in
the share price is attributable to the news that presented an anticipation of the fall in revenue.
Furthermore, the month of June witnessed an increase in the share price and noted a decline in
the price on 3rd June, 2019 at level of 173.30. On other hand, after the investors panic subsided
that has resulted an increase in the valuation, value has risen to the levels of 190.15.

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Therefore, the share price of Apple Inc. is directly impacted by the performance of
company along with the changes in the perspective and demand of investors. Moreover, the
valuation of the share price is impacted by the fear of investors brought by the relevant news
about the Apple Inc. The total amount of income generated by Apple Inc. in the first quarter is
influenced by the adoption of the measures of discount based on the management decisions. The
considerable fall in the share price of Apple Inc. impacted the valuation of Apple Inc.
Answer to question bi):
The table presented above depicts the evaluation of the free cash flow of the project and
the analysis of the proposed project by Apple Inc. generates positive outcome. This is so because
the cash generated from the project is more than the amount that is invested initially. The total
amount of the initial investment made by the company included the working capital and the
overall expenditure of capital. The financial feasibility of the project has been directly evaluated
by the overall flow of cash within the organization and thereby generating a higher level of

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income (Albertijn et al. 2016). Total amount of initial investment is -$5,030,000 and the inflow
of cash generated by the project stood at $ 3,699,000 for the first three years and $ 3,263,000
generated in the fourth year of operation.
Answer to question bii:
The table presented above depicts the net present value of project undertaken by Apple
Inc. for which the value is positive at 264961. This positive NPV implies that high level of
income would be generated. The future cash flow of the project is determined by discounting the
cash flow of the project using the appropriate cost of capital and thereby generating higher level
of revenue. Apple Inc. is able to segregate the projects using the techniques of investment
appraisal for improving the valuation of the firm and generation of income in the long run
(DeBoeuf et al. 2018).
Answer to question biii:
It can be concluded from the analysis of the figures presented in the table above using the
techniques of investment appraisal that the process of valuation of Apple Inc. is increased by
researching the investment needs.

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Answer to question biv:
From the evaluation of the facts of different investment appraisal techniques such as debt
and equity financing, it has been found that the funding the project using equity financing is
considered to be cheapest. This is attributable to the fact that the finance cost of the company is
negatively impacted by the return that is expected from the investors (Gamsakhurdia and
Maisuradze 2016).

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References list:
Abor, J.Y., 2017. Evaluating Capital Investment Decisions: Capital Budgeting.
In Entrepreneurial Finance for MSMEs (pp. 293-320). Palgrave Macmillan, Cham.
Albertijn, S., Drobetz, W. and Johns, M., 2016. Maritime investment appraisal and budgeting.
In The International Handbook of Shipping Finance (pp. 285-313). Palgrave Macmillan,
London.
Andor, G., Mohanty, S.K. and Toth, T., 2015. Capital budgeting practices: A survey of Central
and Eastern European firms. Emerging Markets Review, 23, pp.148-172.
Aversano, N., 2016. Capital Budgeting. Global Encyclopedia of Public Administration, Public
Policy, and Governance, pp.1-6.
Batkovskiy, A.M., Batkovskiy, M.A., Klochkov, V.V., Semenova, E.G. and Fomina, A.V., 2016.
Implementation Risks in Investment Projects on Boosting High-Tech Business Production
Capacity: Analysis and Management. Journal of Applied Economic Sciences. Romania:
European Research Centre of Managerial Studies in Business Administration, 11(6), p.44.
Christiansen, J., D'angona, R. and Bell, C., Evantix GRC LLC, 2015. Method and system for
assessing, managing and monitoring information technology risk. U.S. Patent Application
14/282,347.
DeBoeuf, D., Lee, H., Johnson, D. and Masharuev, M., 2018. Purchasing power return, a new
paradigm of capital investment appraisal. Managerial Finance, 44(2), pp.241-256.