Project Risk, Financing, and Monitoring Report: Apple Inc. Case Study

This report analyzes Apple Inc.'s project risk management, financing, and monitoring practices. It begins with an executive summary and then discusses project selection methods, emphasizing the importance of investment appraisal techniques like NPV, payback period, and IRR. The report explores cost management strategies, including budget planning and standard costing, to minimize project expenses. It also delves into funding options, comparing equity and debt financing, with a focus on Apple's preference for equity. Furthermore, the report covers implementation and winding-up strategies, highlighting the need for thorough research and planning. Part A provides a theoretical framework, while Part B applies these concepts to Apple's financial data and market performance. The analysis concludes with recommendations for Apple Inc. to improve its project management and financial strategies, including considerations for equity financing and share price trends. The report uses financial data to assess Apple's performance, particularly focusing on the impact of iPhone sales and equity financing decisions.

Running head: PROJECT RISK, FINANCING AND MONITORING
Project Risk, Financing and Monitoring
Name of the Student:
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Author’s Note:

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Table of Contents
Executive Summary.........................................................................................................................2
Part A...............................................................................................................................................2
Project Selection..........................................................................................................................3
Cost Management........................................................................................................................4
Funding........................................................................................................................................4
Implementation and Winding up Strategy...................................................................................5
Conclusion and Recommendations..............................................................................................6
Part B...............................................................................................................................................6
Answer to Part a...........................................................................................................................7
Answer to Part b (i)......................................................................................................................9
Answer to Part b (ii)....................................................................................................................9
Answer to Part b (iii).................................................................................................................10
Answer to Part b (iv)..................................................................................................................10
Reference.......................................................................................................................................11

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Executive Summary
The main purpose of this study is to analyse the business of Apple Inc which is considered to be
one of the tech giants operating in the global market. The performance of the business would be
analysed with the help of different projects which are undertaken by the business during the
period. The analysis would be discussing regarding the different consideration which the
management of the company needs to keep in mind while selecting a project. The selection of a
project should be done after conducting a detailed analysis of the same and applying appropriate
investment appraisal techniques for conducting the project. In addition to this, the management
of the company also needs to consider the cost management activities in relation to the project
which is undertaken by the business. The objective of cost management activities is to reduce the
overall costs which is associated with the business and also appropriately manage the risks which
is followed by the business. In addition to this, the funding of a business relating to the project
must also be considered and the same would also be discussed in the study below. The funding
requirements of a business would depend on the project which is to be undertaken by the
business. The discussion below also shows the implementation and winding up strategies which
are followed with respect to a project which is undertaken by the business. The discussion which
is shown below reveals the performance of Apple Inc in relation to different projects which are
undertaken by the business. The study would finally be including recommendations which is
suggested to the management of Apple Inc which can help the business to improve the overall
structure of the business and selection criteria of a project.
Part A

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Project Selection
The different projects which are undertaken by a company has a vital role to play in
generation of revenue for the business. In such a respect, the management of the company needs
to take appropriate decisions as to which project is to be selected and how much investment is to
be made in the same (Harris, 2017). A business uses various methods for determining the
viability of the project before taking any decisions whether to undertake the project or not. These
projects are closely related with long term revenue generation for a business and thereby all
factors need to be considered before undertaking the project. In case of a company which is
operating in technological industry, the project selection method involves application of
investment appraisal techniques such as net present value, payback period, and internal rate of
return. These techniques throw light on the viability of the project and also shows which project
would minimize the risks for the business and at the same time maximize its returns. In other
words, the investment appraisal techniques allow the businesses to estimate the future cash flows
which can be generated from the project.
The management of Apple Inc can effectively utilize the investment appraisal techniques
for determining the long-term viability of a project and ensure that appropriate returns are
generated from the same in future. The business of Apple Inc is also engaged in technology
industry and therefore mostly depends on futuristic projects for securing the future revenues of
the business (Pritchard & PMP, 2014). The different investment appraisal techniques which are
available to the business needs to be applied by Apple Inc for deciding long-term viability of a
future project and whether the same is worth making investments.

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Cost Management
The costs which are incurred while undertaking a project can be controlled effectively
with the help of proper cost management practices. This is applied by the management to control
the costs of a project so that the business can enhance the revenue which is associated with the
project. The first step which is applied by the management is to identify the areas where most
expenses are incurred and then apply cost management techniques like budget planning, standard
costing and time management which helps the management to control the expenses of the
business (Abdel-Kader, Dugdale & Taylor, 2018). The different techniques are used by
businesses for minimizing the expenses so that the profits which are generated from the project
can be enhanced by the business. Therefore, it can be said that the technological companies can
manage the costs by apply cost management techniques for the purpose of generating appropriate
profits from a project.
The management of Apple Inc can adopt appropriate cost management practices so that
the overall costs which is associated with a project can be reduced which might be affecting the
profits of a business. Application of Techniques like budgeting and standard costing helps the
business of Apple Inc to control the costs, reduce wastage of resources and also control the
activities of the business (Hopkin, 2018). Therefore, it can be said appropriately that cost
management techniques can help Apple Inc to minimize the risks which is associated with an
investment and also ensure efficient utilization of resources.
Funding
The funding requirements in a business is considered to be important as the same are
used for financing different projects. The management of a company need to select an
appropriate source of finance for funding of different projects (Higham, Fortune & Boothman,

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2016). The best way of acquiring funds is from either opting for equity financing as a source or
debt financing as a source. The selection regarding the best source of financing which can be
selected by the business depends on the nature of the business and the capital source which the
management of the company intends to use. Equity financing is an appropriate option which is
available to the management of the company which has minimum risks in terms of capital which
is used by businesses and this source of financing reduces the risks conditions of insolvency
which is faced by the business (Cusworth & Franks, 2013). Another option which is available to
the management of a company is to opt for debt financing as a source which requires businesses
to take loans from banks or other financial institutions. However, in case of debt financing the
management has to bear finance costs which can affect the total costs which is incurred by the
business.
The management of Apple Inc also has two sources of financing options which are either
equity financing options or debt financing options. It is therefore, the decision of the
management of the company regarding the source of financing which is to be used by the
business for financing the activities or projects of the business. An analysis of the business
structure of Apple Inc suggest that equity source of financing would be the most appropriate
choice for the business (Spalek, 2014). Therefore, the source of financing is an important
decision which needs to be undertaken for proper functioning of the business.
Implementation and Winding up Strategy
The management of companies need to provide emphasis on planning and forecasting of
activities and cash flows relating to a project. In case adequate research is not undertaken by the
business, a major issue can arise if any faults arise during the performance of the project (Junkes,
Tereso & Afonso, 2015). Therefore, it is suggested that the management of the company need to

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undertake proper research for implementing the project of the business. The above analysis
shows that appropriate estimation regarding the viability of the project need to be established
before any decision can be taken regarding implementation of the project. Therefore, in case of
Apple Inc, the management needs to undertake proper research before deciding the feasibility
regarding any project which is to be undertaken by the business. In order to estimate the viability
of a project, the management of the company can apply investment appraisal techniques and also
secure investment capital (Begenau, 2018). After the completion of a project, the winding up
process automatically starts where all relevant assets of a business are required to be salvaged so
that further cash inflows can be generated from the project (Lam, 2014). Once, the project is
completed than the management takes steps to start a new project and again the management
needs to engage in planning and forecasting the activities of the business.
Conclusion and Recommendations
The analysis above shows the significant steps which are to be taken by a management of
a company for taking appropriate decisions regarding the different projects which are to be
undertaken by the business. The analysis which is shown above also reflects the important of
cost management system, funding, project selection and implementation of the project in the
operations of the business. It is recommended to the management of Apple Inc that they can
effectively utilize the information which is available to them regarding different projects and also
apply cost management techniques and investment appraisal techniques to check the viability of
the project with respect to nature of operation of the business. In addition to this, the viability of
the project is also judged from the inflows which can be generated by the business.
Part B

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Answer to Part a
The case study shows that there is no relevant information that Apple Inc would be
raising appropriate equity capital and the management of the company is facing problems with
the forecasted revenues which is used for generating sales of the business. The management of
the company has issued more equity shares in 2018 for the purpose of accumulating more
capital. The same shows that the management of the company is trying to enhance the capital
base which is used by the business. The intention of the management is to make the capital
structure of the business appropriate so that the liquidity position of the business can be
improved. The reason for use of more equity capital and not rely on debt capital is to reduce the
overall risks which is associated with the business. In addition to this, the use of equity capital
are considered to be efficient way of raising capitals and also a means of enhancing the shares
values in the market.
The equity financing options are used by companies when the business wants to improve
the current operational capability of the business (Bewaji, Yang & Han, 2015). Moreover, equity
financing can also be regarded as one of the best possible financing techniques as it does not
create any burden on the business and also does not create insolvency position which occurs in
case of debt capital.

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Figure 1: (Share Price of Apple Inc)
Source: (Finance.yahoo.com. 2019)
The share price of the business is shown to have been on an increasing trend even though
there was a slight decline in the share price of the business. The share price of Apple Inc. has
been increasing since January 2019 and has reached a high of $215.31 with a low for the year of
$154.23. The above information appropriate presents the share price of the business. The prices
of shares have fallen by 20% in comparison to last year which is a matter of concern for the
business. The main reasons which can be identified regarding the fall in prices of the business
are listed below:
 The iPhone’s sales have decline in the market which is major matter of concern for the
investors. This is mainly due to the tough competition in the market.
 There has been considerable tension between the trade relations of US and China and
therefore the same have affected the share price of Apple Products.

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 The prices of the products which are offered by Apple are not appropriate and are
considered to be high which is a major reason that majority of the customers are looking
for substitutes which has contributed to the low sales of the business.
Answer to Part b (i)
The above table effectively shows the cash flows which can be generated from a project
which is being undertaken by a business and the time frame which is considered is for four years.
The analysis has directly indicated that total cash outflow will be at the levels of -$5.03 million
while the cash flow for forth year is shown to be $ 3.363 million.
Answer to Part b (ii)

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The calculation which is shows reveals that the investment which is to be made in the
project would be viable as the NPV is computed to be positive and IRR is also shown to be
favorable. This shows that the business would be able to generate appropriate funds in the long
run from the project. The NPV has been calculated to be at the levels of $264,961.41 which is
favorable.
Answer to Part b (iii)
The NPV for the project which is undertaken by the business is shown to be positive and
therefore, the same can be considered to be a viable option for the business.
Answer to Part b (iv)
The above analysis effectively reveals that equity source of financing is considered to be
one of the most appropriate options in an organization and the same is also the most effective
option which is available to the business (Cummings & Wright, 2016). The dividends can be
offered to the shareholders for the capital which is accumulated by the business. Thus, the cost of
capital will alter to the interest level of the bond and in case of any value of cost of capital above
12% would make the project not appropriate.

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Reference
Abdel-Kader, M. G., Dugdale, D., & Taylor, P. (2018). Investment decisions in advanced
manufacturing technology: A fuzzy set theory approach. Routledge.
Begenau, J. (2018). Capital requirements, risk choice, and liquidity provision in a business cycle
model. Risk Choice, and Liquidity Provision in a Business Cycle Model (March 6, 2018).
Bewaji, T., Yang, Q., & Han, Y. (2015). Funding accessibility for minority entrepreneurs: An
empirical analysis. Journal of Small Business and Enterprise Development, 22(4), 716-
733.
Cummings, J. R., & Wright, S. (2016). Effect of higher capital requirements on the funding costs
of Australian banks. Australian Economic Review, 49(1), 44-53.
Cusworth, J. W., & Franks, T. R. (2013). Managing projects in developing countries. Routledge.
Finance.yahoo.com. 2019. Yahoo is now part of Oath. [online] Available at:
https://finance.yahoo.com/quote/AAPL?p=AAPL [Accessed 3 Jun. 2019].
Harris, E. (2017). Strategic project risk appraisal and management. Routledge.
Higham, A. P., Fortune, C., & Boothman, J. C. (2016). Sustainability and investment appraisal
for housing regeneration projects. Structural Survey, 34(2), 150-167.
Hopkin, P. (2018). Fundamentals of risk management: understanding, evaluating and
implementing effective risk management. Kogan Page Publishers.

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Junkes, M. B., Tereso, A. P., & Afonso, P. S. (2015). The importance of risk assessment in the
context of investment project management: a case study. Procedia Computer Science, 64,
902-910.
Lam, J. (2014). Enterprise risk management: from incentives to controls. John Wiley & Sons.
Pritchard, C. L., & PMP, P. R. (2014). Risk management: concepts and guidance. Auerbach
Publications.
Spalek, S. (2014). Does investment in project management pay off?. Industrial Management &
Data Systems, 114(5), 832-856.