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This will remind you of your client’s needs and your plan for the design.Tip: It would also help to
review any feedback your instructor provided on Project One.In Module Six, you created a UML
use case diagram for the DriverPass system. Some of the Investment Appraisal Techniques that have
been used to analyse the company's performance are: Net present value of the future cash flows,
internal rate of return, Benefit to cost ratio, Profitability Index, and average accounting rate of
return. Similar to the concept of NPV is the internal rate of return which is obtained by setting the
net present value of the firm to zero. The ultimate objective of an investment appraisal is to increase
the market value of the firm while taking into account all the costs and constraints. See other similar
resources ?3.00 3.00 1 review BUY NOW Save for later Not quite what you were looking for.
Discuss the specific circumstances that brought you to each question, and your conclusions. Fixed
costs (2,500) (2,500) (2,500) (2,500) (2,500) Net cash (6,000) 1,935 2,068 2,205 2,346 3. Answer 3
Optiminism refers to the ability of a company to make decisions on the basis of a positive intuition
while persinism is decision making that takes on a rather negative sense of understanding
circumstances. Annual sales volume (units) 17,500 20,000 22, Calculate and comment on the
expected net present value of the project ACCA 2 Financial Management and Control Answer to
Question 1 (c) Project 1 Internal Failure Cost Savings. The company management is also faced by a
challenge of financing as the cost of lease is quite high and therefore internal financing would not be
enough leading to a need for a loan. Our customer service team will review your report and will be in
touch. ?4.00 4.50 2 reviews BUY NOW Save for later ?4.00 4.50 2 reviews BUY NOW Save for
later Last updated 13 February 2018 Share this Share through email Share through twitter Share
through linkedin Share through facebook Share through pinterest GCSE and A Level Business
resources 4.31 451 reviews Not the right resource. My justification would be the selection of the
project with the highest positive NPV, notable market share and fair cost of lease and development.
GBI Storywnxjwnjxnwjnxjw ENGL180 Assignment 5 - assessment Related documents ART106
Lab 4 - assessment ENGL265-Soultions-7 - assessment JAP285 Pre Lab 2 - assessment WGS298
Final 10 - assessment WGS298 Test Prep 5 - assessment Inventory - principles of accounting multiple
choice questions practice Preview text Tutorial 5 Investment Appraisal 1 Question 1 (P1 CIMA
November 2010) A car manufacturer has been experiencing financial difficulties over the past few
years. Elo’s result 2023: Return on investment increased to 6 per cent and cost effi. The company will
be acquiring vehicles and equipment which will cost ?13.75 million. Passenger numbers in year 1
need to therefore be greater. It requires a lot of calculation to get the cost of capital, and the
calculations can be a difficult and complicated. For projects with higher cash inflows during the
earlier period will have a greater IRR which exaggerates the profitability of the project. Fixed costs
will remain at the higher level for the life of the project. Since you are presenting to a client, your
explanation should be simplified and targeted at a nontechnical audience.Open the client
presentation template, linked in the What to Submit section. Net Present Value enables us to
understand the possible profits a company would earn if a certain project is taken up. The most
beneficial feature of this method is that it takes into account the liquidity of the project, which is
useful for businesses to understand and concentrate on the cash flows of the company. Thus,
companies have to find the optimal point at which the marginal benefit of debt equals the marginal
cost. Akintoye Phillip Olowolaju Economics 2007 Economic crisis in Nigeria started in the early
1980s and led to a rethink of the developmental strategy of Nigerians. In the industry, you would
have help from coworkers and a longer time frame to complete all of the documentation. CS 255
Southern New Hampshire University System Design Document Template. In order to analyze the
two projects completely, the non- financial factors are also to be taken into account. Each slide
includes a heading as well as a prompt for what to include on the slide. Write a review Update
existing review Submit review Cancel It's good to leave some feedback. NPV is generally used to
compare projects on the basis of factors like cost benefits, earnings, etc.
Rupert, B. 1999, Avoiding pitfalls in Investment Appraisal. Remember that these speaker notes
represent what would be the spoken part of your presentation. There are different methods of
Investment Appraisal using which a project can be evaluated. An optimal capital structure is the
objectively best mix of debt, preferred stock, and common stock that maximizes a company’s market
value while minimizing its cost of capital.bjectively best mix of debt, preferred stock, and common
stock that maximizes a company’s market value while minimizing its co Show More What Is an
Optimal Capital Structure. The main drawback in this method is that it does not take into account the
profitability of a project (Burke and Wilks, 2007). The purpose of this paper is to examine the
MagNet Hungarian Community Bank’s approach as a values-based bank in order to compare how
the operation of the bank differs from that of traditional ones—even if these apply the Corporate
Social Responsibility approach. Bundle Business Finance Revision Pack An extensive resource pack
of GCSE, AS and A Level revision notes and support materials. The result of the ranking is shown
below: Project A Project B NPV 1 st 2 nd IRR 2 nd 1 st Discuss potential reasons why the conflict
between the NPV and IRR ranking may have arisen. Tyneside Gravel as an organization can use its
financial strengths to navigate their opportunity for expansion to overcome the threats of divided
management and the weakness of not being familiar with their new site (McEvoy, 2012). If so, how
does it survive outside of a physical body? Onyiego Business, Economics 2019 Save 50 References
Citation Type Has PDF Author More Filters More Filters Filters Sort by Most Influenced Papers Sort
by Citation Count Sort by Recency Entrepreneurship and the growth of SMEs in the furniture
industry in Tanzania N. Payment is made only after you have completed your 1-on-1 session and are
satisfied with your session. Question 3 Cash Flow Presentation Analysis Tyneside cash flow
presentation takes an incremented cash flow format, which makes it difficult for cash inflows and
outflows to be correctly identified. Is the physical world more or less real than the spiritual or
psychological world? This will remind you of your client’s needs and your plan for the design.Tip: It
would also help to review any feedback your instructor provided on Project One.In Module Six, you
created a UML use case diagram for the DriverPass system. Also, when the difference between the
IRR and the cost of capital or the discount rate is high, the error also increases. Answer 3
Optiminism refers to the ability of a company to make decisions on the basis of a positive intuition
while persinism is decision making that takes on a rather negative sense of understanding
circumstances. Since you are explaining your designs to the client, you must do the
following:Explain how each component of your design meets the client’s needs.Use nontechnical
language to communicate your ideas.Clearly articulate your designs with polished grammar and
sufficient detail.What to SubmitTo complete this project, you must submit the following:System
Design DocumentUse the System Design Document Template to complete your system design
document. Call My Blog Who is ICM Consulting ICM Consulting Limited (ICM Consulting) is a
provider of independent financial advice to individuals, corporate and institutional investors during
transactions where it comes to important decisions that define your future. The company uses a cost
of capital of 8% per annum. The company should be able to change its management approach to
expansion. NPV enables the comparison of various rates of interest and also helps analyse what the
earning would be if another project were taken up (Weston and Copeland, 1988). To make this
determination, the best appraisal method should be selected. This resource hasn't been reviewed yet
To ensure quality for our reviews, only customers who have downloaded this resource can review it
Report this resource to let us know if it violates our terms and conditions. It may vary due to the fact
that it takes into account the accounting information, since different accountants have different
methods of determining costs. It can be evaluated form the annual report of 2013-2014 that this
financial year has been a peak year for the investment and financial profits for the company. This
method is very useful for projects of the same size, mostly least cost situations. The machine is
expected to have a useful life of five years and no residual value. Internal rate of return (IRR) is
defined as the rate of discount that has to be applied on a project’s cash flows to make the Net
Present Value (NPV) equal to zero. Once the ARR values are computed for the projects under
investigation, the project with the higher ARR than the cut-off rate is accepted (Fisher an Martin,
1994).
If the NPV value is negative, then it indicates that the investment is not worthwhile and that it will
cause losses to the company. Answer 5 Tyneside Company can also look at sensitivity by a
consideration of how hard the process of choosing a project is and appreciating the difference in the
projects profitability, market sales and the associated costs of supporting the projects. Your
PowerPoint presentation should be a minimum of 6 slides in length. The Tyneside Company on the
other hand should also be able to analysis the Baldon Farm market which has a number of customers
within the site but its viability will highly depend on securing more customers on the south.
Calculations are done using the discount rate of the cost of capital that is determined depending on
considerations of the future projected risk of the project (Hastings, 2009). The consultant
recommended that the company implement a new quality control process. Remember that these
speaker notes represent what would be the spoken part of your presentation. It is reasonably easy to
write scenarios but it is working out the answers that takes more time. Project 2 Increase the number
of buses to enable new routes to be opened. Semantic Scholar is a free, AI-powered research tool for
scientific literature, based at the Allen Institute for AI. They will have no residual value at the end of
their useful life. You can download the paper by clicking the button above. Such an analysis is linear
and static in nature and assumes the investment opportunity is not totally reversible or is a now-or-
never opportunity. Despite its widespread popularity, the payback method has serious limitations.
Replace the bracketed text in the template with the relevant information. It is helpful in cases where
a company is facing a liquidity crisis and therefore aims that it quickly recovers cash thus reducing
the risk of insolvency. She has asked you to complete a system design document, which will include
several UML diagrams and a description of the technical requirements for the DriverPass system.
Cash flow forecasts have been prepared using the information provided in the case. You are not
required to include methods, but you may if you wish.Include a copy of each UML diagram in your
system design document. Isaga Business 2012 PhD thesis from Vrije University. Answer: Fill in the
blanks Question 1 (a) Project 1 Internal Failure Cost Savings. In this method, initially all the future
cash flows that will be generated by the project are discounted to present value. She would like you
to include speaker notes for each slide that include your explanation of the slide and how it meets
the client’s needs. To make this determination, the best appraisal method should be selected. If no
investment is made the current passenger volume, average fares and variable costs will remain the
same on current routes for the next five years. How involved should the common citizen be in
government? As time value of money changes with each day, what we will earn in future may not
equally valuable. The issue of the market should be considered relative to Claedon Hill especially
based on the fact that one of the management has secured a promise with a top contractor in the
region to buy from the company should they decide to take on the Claedon Hill farm. Costs have
increased due to quality issues that led to a recall of some models of its cars. You are not required to
include methods, but you may if you wish.Include a copy of each UML diagram in your system
design document.
Strategic business risk of expansion is likely to face an organization especially if fails to meet up its
laid out objectives for gaining ground following the expansion. Annual sales volume (units) 17,500
20,000 22, Calculate and comment on the expected net present value of the project ACCA 2
Financial Management and Control Answer to Question 1 (c) Project 1 Internal Failure Cost Savings.
Submit both the PowerPoint (.ppt) file as well as the Word (.doc or.docx) file containing your slides
and speaker notes. Replacement of the old machinery or equipment due to the advancement of the
technology. The company will therefore have to choose between the two alternatives. This is because
the company will lease at a lower cost, finish on the development of the site within one year and use
its own internal financing, as is evident in the above discussed case, based on the 12.35% cross over
rate. Question 8 Issues with forecasting methods and how to minimize them Answer 1 Through
sensitivity analysis it will be possible for the company to analyze how the profitability of the chosen
project will affect the company sales and costs. Review 3 Select overall rating (no rating) Your
rating is required to reflect your happiness. The machine is expected to have a useful life of five
years and no residual value. This method is very useful for projects of the same size, mostly least cost
situations. These factors, together with our deep sector knowledge combine to make great deals
better. Sales have reduced significantly as a result of the worldwide economic recession. Replace the
bracketed text in the template with the relevant information. Based on your excellent work thus far,
your project lead would like you to continue designing the system for DriverPass. The risks of
external borrowing precede the risks of internal borrowing thus making it more complicated for the
company. Information AI Chat Tutorial 5 - Investment Appraisals answers Great title. This resource
hasn't been reviewed yet To ensure quality for our reviews, only customers who have downloaded
this resource can review it Report this resource to let us know if it violates our terms and conditions.
Your team lead wants to see your ability to present your ideas and designs back to clients. Payback
period is the time taken by a project to generate cumulative cash flows which equals the initial
investment. If the NPV value is positive, then it indicates that the investment will generate gains to
the company and that it is worthwhile considering the project, as it will increase the value of the
firm. Production volume last year was 50,000 cars and it is expected that this will incre ase by 4%
per annum each year for the next five years. It is evident that the Autumn Model has a relatively
shorter payback period than that of the Spring Model. This is 100% legal. You may not submit
downloaded papers as your own, that is cheating. Also you. These are only the decision making
tools that will help management, but management still needs to incorporate their own judgment and
experience while making any decision. In this method, initially all the future cash flows that will be
generated by the project are discounted to present value. Do people behave differently in a crowd
than they would individually? Question 6 Risks associated with selection of either investment This is
the decision the firm is making, the owner and the management, with the face of continued growth
Answer: project 1 Incase the firm chooses the Cleadon Hill investment, it faces the challenge of
having an unstable market which will be dependent on whether it is able to acquire a new
construction site in the near future. As noted above there can be several different occasions where a
conflict can arise between the NPV and IRR results. Although project 2 has very expensive costs
involved, by careful work by the financial department it can work very realistically and has a lot of
potential. Answer: Fill in the blanks Question 1 (a) Project 1 Internal Failure Cost Savings. To make
this determination, the best appraisal method should be selected.
Your PowerPoint presentation should be a minimum of 6 slides in length. Reviews Select overall
rating (no rating) Your rating is required to reflect your happiness. This is because the company will
lease at a lower cost, finish on the development of the site within one year and use its own internal
financing, as is evident in the above discussed case, based on the 12.35% cross over rate. Question 8
Issues with forecasting methods and how to minimize them Answer 1 Through sensitivity analysis it
will be possible for the company to analyze how the profitability of the chosen project will affect the
company sales and costs. It may vary due to the fact that it takes into account the accounting
information, since different accountants have different methods of determining costs. Our customer
service team will review your report and will be in touch. ?1.00 (no rating) 0 reviews BUY NOW
Save for later ?1.00 (no rating) 0 reviews BUY NOW Save for later Last updated 10 May 2023
Share this Share through email Share through twitter Share through linkedin Share through facebook
Share through pinterest Business Hub 1.25 4 reviews Not the right resource. Find all the books, read
about the author, and more. This is 100% legal. You may not submit downloaded papers as your
own, that is cheating. Also you. Reviews Select overall rating (no rating) Your rating is required to
reflect your happiness. Passenger numbers in year 1 need to therefore be greater. This information is
very important in making an informed investment decision for any potential investor. This cost can
be considered to be a part of the initial investment. Question 6 Risks associated with selection of
either investment This is the decision the firm is making, the owner and the management, with the
face of continued growth Answer: project 1 Incase the firm chooses the Cleadon Hill investment, it
faces the challenge of having an unstable market which will be dependent on whether it is able to
acquire a new construction site in the near future. These are broadly classified into Traditional
Techniques and Discounted Cash Flow Techniques. It implies that if the rate of return is increased,
the performance of this project can exceed the current profitability index. Weston, J. F. and
Copeland, T. E., 1988, Managerial Finance, 2nd edn., Cassell Educational Ltd, London. Answer 5
Tyneside Company can also look at sensitivity by a consideration of how hard the process of
choosing a project is and appreciating the difference in the projects profitability, market sales and the
associated costs of supporting the projects. It is usually expressed in number of years and is worked
out by dividing the earnings by the original investment. Net Present Value (NPV) By definition, the
NPV is an investment appraisal Methods which is the sum of the present values (PV) for all the cash
flows that are expected to increase in the event that Matero PLC decides to execute the project.
Internal rate of return is the return on the project which has a net present value of zero. Required: (a)
Calculate for Project 1 the relevant cash flows that the accountant should have used for year 1 when
appraising the project. By understanding the needs and expectations of their customers, Tyneside
Gravel will manage to emerge top of their competitors and become a leading sand company in the
area. Financing - long term and short-term cash flows related to liabilities and owners’ equity;
dividends are a. The acceptance of a project completely depends on this period i.e., lower the
payback period, better is the project returns. The company will incur costs of ?0.44 million in Year 5
in order to do this. The company also faces a strategic business risk which can be eliminated by
having managers who are more united in a common organizational mission and vision. A firm
conducts an investment appraisal whenever it authorizes a capital project or expenditure. The lower
the cost of capital, the greater the present value of the firm’s future cash flows, discounted by the
WACC. For projects with higher cash inflows during the earlier period will have a greater IRR which
exaggerates the profitability of the project. NPV is generally used to compare projects on the basis of
factors like cost benefits, earnings, etc. Required: (a) Calculate for Project 1 the relevant cash flows
that the accountant should have used for year 1 when appraising the project.
It provides results that are simple to comprehend (Weston and Copeland, 1988). This is 100% legal.
You may not submit downloaded papers as your own, that is cheating. Also you. By having the
Claedon Hill as a site the company is more assured of a constant income since it will be able to make
240000 tons per year for the first year which is an assured estimate due to the Mowlem agreement.
The director plans to share the most promising product briefs with clients at an upcoming meeting.
Sales have reduced significantly as a result of the worldwide economic recession. This can be
corrected by using a cash flow that only takes into perspective only the cash inflow of the project,
free cash flow and the initial cost of lease. The value of a firm is dependent on the expected future
earnings. Your class diagram should include the different classes and attributes needed for your
system design. The firm has been offered a deal to pay 700000 dollars at the initial lease coupled
with the cost of development which is expected to be about 400000 dollars especially because the
area is remote and requires more of infrastructural development. Second, be able to explain the
purpose of the credit. Write a review Update existing review Submit review Cancel It's good to leave
some feedback. Is morality culturally based or individually based, or is there a universal morality?
Our customer service team will review your report and will be in touch. ?0.00 (no rating) 0 reviews
Download Save for later ?0.00 (no rating) 0 reviews Download Save for later Last updated 1 March
2022 Share this Share through email Share through twitter Share through linkedin Share through
facebook Share through pinterest Kuziwa 4.25 22 reviews Not the right resource. NPV is a superior
method of investment appraisal in theory, and recent study approved that it the most preferred tool in
practices in management perspectives (Patricia and Glenn's, 2002). First of all, it does not consider
the time value of money although this can be overcome by using discounted cash flows. Fixed costs
(2,500) (2,500) (2,500) (2,500) (2,500) Net cash (6,000) 1,935 2,068 2,205 2,346 3. Report this
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not useful Embed Share Jump to Page You are on page 1 of 4 Search inside document. This is
especially because at the end it presents the discounted cash flow other than the net income of the
company. Is morality culturally based or individually based, or is there a universal morality? The
main rule of the project is higher the rate of interest over the cost of capital, the better it is for the
company and hence the project can be selected (Constantini, 2006) (Samuels et al, 2000). In theory,
debt financing offers the lowest cost of capital due to its tax deductibility. CS 255 Southern New
Hampshire University System Design Document Template. Net Present Value enables us to
understand the possible profits a company would earn if a certain project is taken up. How does
society affect language and other types of communication? Internal rate of return (IRR) is defined as
the rate of discount that has to be applied on a project’s cash flows to make the Net Present Value
(NPV) equal to zero. Keep on browsing if you are OK with that, or find out how to manage cookies.
This design document will eventually be shared with the developers on your team who will
implement your design.Finally, your project lead has asked you to create a short presentation for the
client based on your design. The sales at Cleadon Hill will only begin after a year of preparing the
site which will most likely affect the company’s position. The company for example shows an
addition to the initial cost of lease to other costs that are incurred within the business and therefore
takes into perspective all indirect effects that are taken in the cashflow which develops a sense of
unrealism.