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Determine the Payback and the Net Present Value

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Reference no: EM132222006 , Length: word count:6000

Financial Management Assignment -

Section A -

a) Carry out a financial analysis of both companies. This analysis should include

I. Ratios you have computed, an evaluation of the financial performance and current financial position of both companies. This should include investor ratios.

II. All computations should be included in an appendix.

b) Based on your assumption of Tim 's attitude to risk which should be clearly stated and supported by the results in (a), advise Tim on how he should proceed with his investment decision.

Section B -

a) Determine the Payback and the Net Present Value (NPV) of the two proposals. Use a discount rate of 7% for the NPV calculation.

b) Determine the Accounting Rate of Return (ARR) for each project.

c) Evaluate the results of part (a) and (b) above. Recommend with reasons the project that should be adopted.

The evaluation of the results of the two proposed projects.

d) Critically discuss the advantages and shortcomings of the Payback and NPV techniques as ways of evaluating capital projects.

e) Discuss the non-financial factors that need to be considered in investment appraisal process.

Reference no: EM132222006

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