We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Finance Project - Essay Example

Comments (0) Cite this document
Final Project: Power Co Introduction: PowerCo, a medium sized generator and seller of electricity in the United States is aiming to build a new generator for the increased consumption of electricity in the area. In order to find how much beneficial the project will be for the company, financial projections were conducted by the treasury department…
Download paper
Finance Project
Read TextPreview

Extract of sample
Finance Project

As the project considers a period of ten years critical evaluation is required to decide the outcome of the project. Analysis: 1. The expected cost for the project: Year Expected cost(in million dollars) 1 25 2 28 Opportunity cost of the project= 8% Present value of the cost of the project: Cost (i) Discounting factor at 8 % (ii) Present value (i*ii) 25 0.926 23.15 28 0.857 23.996 2. Present value of the after tax cash profit: Year( i) Cash flow(after tax) (in million $) (ii) Discounting factor at 8% (iii) Present value(ii*iii) 3 6 0.794 4.764 4 7 0.735 5.145 5 8 .681 5.448 6 9 0.63 5.67 7 9 0.583 5.247 8 9 0.541 4.869 9 9 0.5 4.5 10 9 0.463 4.167 11 9 0.429 3.861 12 9 0.397 3.573 Total present value of cash flows=$47.244. Discounting Factor values (Present Value of an Ordinary Annuity Table, n. d) 3. Expected Net present value= Present value of the total cash inflow-the present value of the total cash outflow= 47.244-(23.15+23.996) (Kapil, n. d, p.399) = $ 0.098(in millions) As the figure here reflects a positive NPV so the project will be beneficial to the organization and should be accepted. The calculation of the Net Present Value is a method of Capital Budgeting which is done to critically evaluate the profitability behind the implementation of a new project. The positive value in the result favors the acceptability of the project. 4. Risk inherent to the project: The common risks which are associated with any business are business risk, financial risk and market risk. Business risk involves the risk under which the firm is unable to cover the operating cost associated. In the case of power Co, it is planning to install new generator thinking about the increase in demand. A study assumes that the building process will take 2 years and in the two years’ time, there will not be much inflow from the new generator involved. If the risk arises in the business that the involvement of the new project will pose a difficulty in raising the operating cost of the project, then the business runs the probability of becoming insolvent. The next type of risk which the business is likely to face is the financial risk. Financial risk involves the mode of financing for the project. The firm may be unable to meet its financial obligation for the project. In such case the debt of the firm will increase and the firm will not be able to realize the expected profit. In dealing with such kind of risk Power Co should be careful in choosing its mode of finance. It should chose an option which appears flexible for the business, it will be better if the firm chooses optimum financial mix for the purpose which should have a considerable amount of the portion of the equity. (Gitman, 2007, p.427) A portion of the equity in the financing raises confidence among the investors and also does benefit the organization in the long run. The organization is relieved of the burden of repaying the debt to some extent in case of mixed financing. The final type of risk inherent in the business is the market risk. It is to be remembered that the main reason of Power Co in opting for the installation of the new generator is the prediction of the rise in demand. Power Co forecasted that within the next ten years their rate of production will be insufficient as they are the major suppliers of electricity in the region. However the ... Read More
Cite this document
  • APA
  • MLA
(“Finance Project Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/47690-financeproject
(Finance Project Essay Example | Topics and Well Written Essays - 1250 Words)
“Finance Project Essay Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.net/finance-accounting/47690-financeproject.
  • Cited: 0 times
Comments (0)
Click to create a comment
Finance project
Its hotels and lodging services include both company operated as well as “franchised properties” and their revenue earnings for the fiscal year 2012 have registered a whopping “$12 billion” (par.1). The company’s headquarters is located in Bethesda, Maryland, USA and it is “founded by” J Willard and Alice Marriott and led by “Marriott family leadership” for over eighty years (par.1).
3 Pages(750 words)Essay
Corporate Finance Project
In terms of competitiveness, the spectrum of market structures reaches from pure competition, to monopolistic competition, to oligopoly to pure monopoly among them oligopoly market is dominated by a few large producers of a homogeneous or differentiated product.
16 Pages(4000 words)Essay
Finance Project
Less prevalent was compensation tied to firm's performance, such as stock and/or stock options. Historically, performance-based compensation was designed for corporate executives and officers of the firm. This form of compensation helped align the interests of management and shareholders.
13 Pages(3250 words)Essay
Finance Project Deliverable
2 Pages(500 words)Essay
Finance project 2
Now I would like to throw light on the above mentioned factors that would clarify the impact of these factors. Trade deficit occurs when country exports to foreign countries are lower than the imports from these foreign
4 Pages(1000 words)Essay
Careers in Finance Project
Investment bankers perform the function of arranging and negotiating huge financial transactions. The work of the investment banker is diverse and it is dictated by the clients’ financial needs. For example, when a new
5 Pages(1250 words)Essay
Finance Project
The years chosen for testing the financials are 2011 and 2009. AMN’s ROE is -$ 0.19 in 2011, compared to -$0.72 in 2009. This is due to the fact that AMN because AMN collected negative net income figures in 2009 and 2011. In 2009, the net loss was huge hence
1 Pages(250 words)Essay
Finance Project
The return on equity ratio shows the way the funds of the shareholders are utilized in the maximization of the profits of the company. The ratio has
1 Pages(250 words)Essay
Project Finance (Project Management)
The role of this instrument just cannot be overestimated, especially, in the conditions of the global financial crisis. First of all, the term “project finance” should be explained. One of the
4 Pages(1000 words)Essay
Personal finance project
With increased globalization, the world has become more complex in the financial world. Banks offer a huge range of investment options and so do the different markets. Currently,
13 Pages(3250 words)Essay
Let us find you another Essay on topic Finance Project for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us