Finance

Free cash flows of the project for next five years can be calculated by adding depreciation values and subtracting changes in working capital from net income. In 2010, there will be a cash outflow of $2.2 million as capital expenditure. In 2011, there will be an additional one time cash outflow of $300,000 as an advertising expense. Using net free cash flow values for next five years and discount rate for discounting, NPV for the project comes out to be $2907, 100. The rate of return at which net present value becomes zero i.e.

To make the most informed decision the IRRs and payback periods of the projects should be compared in conjunction with the NPVs of the two projects. The NPV analysis of the two projects under consideration indicates that the MMDC Project is the better of the two projects.

Statement of Work ................................................................................................................................. 35 Project Deliverables ................................................................................................................................ 35 Acceptance Criteria ................................................................................................................................. 36 Work Breakdown Structure .................................................................................................................... 41 Project Boundaries .................................................................................................................................. 43 Project Assumptions

2. Due to the circumstances of the contract (that it be for sale of land) specific performance will be awarded.

The statement of cash flows answers the following questions about cash: (a) Where did the cash come from during the period? (b) What

7) See Table 1 NPV=42,318.71 IRR = 14% MIRR = 12% Payback period= 2.93 years. Yes the project should be undertaken.

Thus, by year three the company will be making a profit off the investment as year three is 86.73 million profit by 55.35 cost giving the company a 31.38 million dollar surplus. Generally, a period of payback of three year or less is acceptable (Reference Entry) causing this project to be viable based off the payback analysis. Although, these calculations are flawed. The reason for this is because the time value of money is not taken into effect when calculating payback periods which is where IRR can further assist in a more realistic financial picture (Reference Entry).

The company should accept this project. The project payback period is between 2 to 3 years.

In my opinion the company should reject the project as the ARR is much less than expected and the payback period is nearly as long as the maximum payback period which could put company to danger.

later in the project life. With a NPV of less than -$810,000, Scenario 6 is the project with the

is only three years. Second; the payback period for the project A is 3 years and for G

If some members of the syndicate of underwriters are more reluctant than others to commit to the project, negotiating their commitment is expected to increase from two to three weeks. Given this scenario, the total project time would, again, stay the same (see Figure Q4-C). Since negotiating the spread and negotiating the commitment are occurring

a) Will the financial statements presented show a true representation of the company 's performance?

The parties to the contract have approved the contract and are committed to perform their respective obligations;

The objective to control the fund flows of the project is achieved through the series of covenants in relation to several types of control accounts that the SPV must act in compliance with at all time. Prior to the disbursement of funds, these control accounts must be set up as condition precedent to the SLA. The purpose of these control accounts is to control the flow of the funds in and out of the project. It is to say that these control accounts confer the ability to control the project’s fund flows to the syndicate banks because any breach of these control accounts rules will constitutes an event of default.