Accounting And Finance For Technology

The payback period looks at a project only until the costs have been recovered. This analysis tool is often ignored because it does not take into consideration the time value of money. The time value of money limitation of the payback period can be modified by using the discounted cash flows of a project for the analysis of when the outflows will be recovered.

The relatively well posed project with promises of great future pay offs must be examined closely nevertheless to determine its true profitability. As such, the Super Project’s NPV must be calculated, however before we proceed we must acknowledge the relevant cash flows. The project incurred an expense of testing the market. This expense, however, must not be included in our cash flow analysis because it can be considered a sunk cost. This expense is required for ‘taking a temperature’ of the market and will not be recovered. Other sources of cash flow include:

Grappling with the potential purchase of Olive Hill Farm, we decided to conduct a financial analysis to determine whether the project should be taken or not. Our financial analysis include scenarios for the best, worse, and most likely outcomes of purchasing the farm. For each scenario a Net Present Worth (NPW) and an Internal Rate of Return (IRR) was calculated and compared. This revealed that there was little gain for the worst case scenario and large gains for the other two scenarios. A sensitivity analysis and a break-even analysis was also conducted. The sensitivity analysis identified the most influential factors on the NPW. In the end, the analysis favored buying Olive Hill Farm because it would be a low risk, high reward investment.

In this analysis, we included the overhead expense for 1972-1977 because as the project begins to gain a foothold in the market it will acquire a larger market share and will become a larger portion of General Foods’ overall dessert sales. Also, the agglomerator and excess capacity was charged

Star Appliance is looking to expand their product line and is considering three different projects: dishwashers, garbage disposals, and trash compactors. We want to determine which project would be worth doing by determining if they will add value to Star. Thus, the project(s) that will add the most value to Star Appliance will be worth pursuing. The current hurdle rate of 10% should be re-evaluated by finding the weighted average cost of capital (WACC). Then by forecasting the cash flows of each project and discounting them by the WACC to find the net present value, or by solving for the internal rate of return, we should be able to see which projects Star should undertake.

1.) What are the recommended percentages of each project that HVC should fund and the net present value of the total investment?

Our approach to valuing the processing plant can easily be decomposed into three distinct steps first, find the value of the foreseeable free cash flows. Next, calculate the terminal value of the project. Finally, take the present value of those flows. The next few paragraphs walk through each of these steps in order of progression.

The first issue which needs to be addressed is to perform a monthly cash flow analysis for the fiscal year ending December 31st, 1990. Robert & Alex would like to open up their own restaurant/brew pub with $200,000 of their own money and with the use of external financing to finance the rest of the company until excess cash flows remain stable and positive.

What is the project’s cost of equity? What is the appropriate discount factor to use for evaluating the refrigerator project?

Also, according to break-even analysis operating with the single mold and excluding warehousing costs, a minimum of 12,035 units must be sold to break even. Under a similar situation with the double mold, 15,507 units must be sold to break even, which is about half of the optimistic sales projection. Also under the optimistic sales projection, a positive return on investment is expected. Because the company is turning profit,less additional investment is required. Additionally under the pessimistic and expected situation, the company turns losses, and under the optimistic projections, Chef’s Toolkit only has a net income of 13% of its revenues. Selecting Preferred alternative According to the above information and the projected pro-forma statements, Dale Reid should not invest his money in the company. The company’s lack of current assets, high expenses and low per-unit revenue create an unfortunate and unprofitable investment in pessimistic and expected situations. Only in the optimistic production and sales does the company begin to turn profit, but this profit is low. Chef’s Toolkit needs desperate restructuring and additional revenue sources before Dale Reid should invest. Developing

3.0 Investigate the suitability of different sources of finance to facilitate Par Foods Ltd.’s short term objectives.

3) To assess the potential for a new venture on campus called “Sweet Bites,” I would pay close attention to the potential value of the venture, using calculations and predictions to determine the anticipated profit and loss for that venture. Understanding that business owners tend to be more optimistic in their business, as an investor I would need to be more cautious in were I invest my money. The assessment of a new business venture must evaluate many different situations and accounts to find a feasible outcome to determine the value of the new venture. To help in my assessment I would need to see a business plan that projects business activities and growth for the first 5 years. By developing a clear business plan, the owner can present his or her expectations for the business over the course of the next few years, and I as the investors can review this plan to determine how much value the business venture currently has and is expected to have in the future. I would also determine the business value which is what the business is worth if it was to be sold. Subtracting liabilities from assets will give a rough estimate of the value. To help with my assessment I would contact other investors to see what they would off for the new business venture. This will help determine the value of “Sweet Bites” and give me as an

3) To assess the potential for a new venture on campus called “Sweet Bites,” I would pay close attention to the potential value of the venture, using calculations and predictions to determine the anticipated profit and loss for that venture. Understanding that business owners tend to be more optimistic in their business, as an investor I would need to be more cautious in were I invest my money. The assessment of a new business venture must evaluate many different situations and accounts to find a feasible outcome to determine the value of the new venture. To help in my assessment I would need to see a business plan that projects business activities and growth for the first 5 years. By developing a clear business plan, the owner can present his or her expectations for the business over the course of the next few years, and I as the investors can review this plan to determine how much value the business venture currently has and is expected to have in the future. I would also determine the business value which is what the business is worth if it was to be sold. Subtracting liabilities from assets will give a rough estimate of the value. To help with my assessment I would contact other investors to see what they would off for the new business venture. This will help determine the value of “Sweet Bites” and give me as an

Granny’s Greenhouse does not perceive a need to fund the project by issuing bonds or stocks. Based on the projected net income, Granny’s will have positive cash flow of almost $66 thousand already by the sixth month of operation. In other words, retained earnings will be more than enough to fund business operations. Assets will increase within the first year and surplus funds will be invested conservatively to draw on when needed. Due to high margins and a strong contract with Whole Foods guaranteeing that the tomatoes will be purchased; the bank is willing to finance the operation even in today’s difficult climate. (Priest, 2013)

The economic interest theory of regulation assumes that regulation is created to benefit the private interests of particular groups but at the expense of the general public. The economic assumption is that people will seek to advance their own self-interest above any others and will do so rationally (Deegan 2006). For example, Levine (2006) states that airline regulation has often been used as a good example of economic interest theory. The airline industry was a competitive industry which was subjected to price and entry regulation