Identify the cost of financing through the issuance of bonds

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Reference no: EM132930097

Pear Computer Horizons Case Study

It is January 1st, 2018. You are a senior analyst at Pear Computer Horizons Limited (PCH), one of the leading global technology providers for computers, cell phones, and business services in Canada. The CEO of PCH, Amanda Morrison, has reached out to you to draft a report to evaluate two investment proposals, building on your analysis from Assignment 1.

Purpose
For this case approach, you will demonstrate your ability to develop costing methods and a set of forecasts of future cash flows for two proposed investment projects. You will also be required to identify the cost of financing through the issuance of bonds.

How to Proceed
Building on your analysis and proposal from Assignment 1, develop your investment proposal business case draft:
1. Create a title page with the project proposal names and author identification.
2. Calculate the bond yield to utilize as your required return.
3. Prepare a summary narrative (i.e., a detailed description) of each proposal with detailed elements on the initial investment, as well as the costs/revenues over the life of each of the projects. Identify which revenues and costs are relevant to your analysis, and which costs are irrelevant. Identify the time horizon for each investment.
4. Calculate the after-tax cash flows during the life of each of the projects. Be sure to identify the total costs of ownership and deduct those costs from the benefits to arrive at the net cash inflow per year.
5. Utilizing the after-tax cash flows from Part 4, evaluate each investment proposal utilizing the following criteria (unless directed otherwise):
a. changes in payments from beginning of period to end;
b. Payback;
c. Discounted payback;
d. NPV;
e. Profitability index.
6. Clearly indicate whether any of the above criteria support each of the project proposals, and what the company should ultimately decide to do.

Attachment:- Pear Computer Horizons Case Study.rar

Reference no: EM132930097

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