Assignments
Financial management
Group assignment: Investment appraisal
Li Chen 08198937
Diane Oyaya 10222775
Words: 1548
Dr Francesca Gagliardi
Financial management assignment: Investment appraisal
Delta Plc. Manufactures motorcycles. They are trying to increase profit by investing into and new project to enter a racing team for a period of four years. The company has its expectations and in order to go ahead with the investment. The cost of capital for this investment is 15percent. The company set a target accounting rate of return on investment of 15percent and a payback period of three years or less for all projects. As external consultants we will be using different m and calculations to be able to determine whether this investment is worth going for and be able to make a general recommendation to the company.
“One of the most important long-term decisions for any business relates to investment. Investment is the purchase or creation of assets with the objective of making gains in the future. Typically investment involves using financial resources to purchase a machine/ building or other asset, which will then yield returns to an organisation over a period of time.” http://businesscasestudies.co.uk/business-theory/finance/investment-appraisal.html
Projected financial data for the project (£)
| Year 1 | Year 2 | Year 3 | Year 4 | Additional sales revenue | -- | 350,000 | 390,000 | 410,000 | Operating costs | | | | | Materials and components | (50,000) | (65,000) | (65,000) | (50,000) | Salaries and wages | (70,000) | (80,000) | (85,000) | (85,000) | Depreciation | (45,000) | (45,000) | (45,000) | (45,000) | Advertising | (25,000) | (25,000) | (25,000) | (25,000) | Overheads | (10,000) | (10,000) | (10,000) | (10,000) | Profit (loss) | (200,000) | 125,000 | 160,000 | 195,000 |
Here is the financial table of the project.
By using this table, we will be assessing the appraisal by carrying out some calculations for the
Group assignment: Investment appraisal
Li Chen 08198937
Diane Oyaya 10222775
Words: 1548
Dr Francesca Gagliardi
Financial management assignment: Investment appraisal
Delta Plc. Manufactures motorcycles. They are trying to increase profit by investing into and new project to enter a racing team for a period of four years. The company has its expectations and in order to go ahead with the investment. The cost of capital for this investment is 15percent. The company set a target accounting rate of return on investment of 15percent and a payback period of three years or less for all projects. As external consultants we will be using different m and calculations to be able to determine whether this investment is worth going for and be able to make a general recommendation to the company.
“One of the most important long-term decisions for any business relates to investment. Investment is the purchase or creation of assets with the objective of making gains in the future. Typically investment involves using financial resources to purchase a machine/ building or other asset, which will then yield returns to an organisation over a period of time.” http://businesscasestudies.co.uk/business-theory/finance/investment-appraisal.html
Projected financial data for the project (£)
| Year 1 | Year 2 | Year 3 | Year 4 | Additional sales revenue | -- | 350,000 | 390,000 | 410,000 | Operating costs | | | | | Materials and components | (50,000) | (65,000) | (65,000) | (50,000) | Salaries and wages | (70,000) | (80,000) | (85,000) | (85,000) | Depreciation | (45,000) | (45,000) | (45,000) | (45,000) | Advertising | (25,000) | (25,000) | (25,000) | (25,000) | Overheads | (10,000) | (10,000) | (10,000) | (10,000) | Profit (loss) | (200,000) | 125,000 | 160,000 | 195,000 |
Here is the financial table of the project.
By using this table, we will be assessing the appraisal by carrying out some calculations for the