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Investment Appraisal: The Zeta plc. Case
Finance & Accounting
Pages 6 (1506 words)
Investment Appraisal: The Zeta plc Case Introduction One of the major objectives of any company is to make itself efficient enough to undertake expansion of its business activities which can also be named as growth activities. Growth of any organization is mainly occurred either as organic growth or as growth through mergers and acquisition (Brigham et al, 2008).
This article aims at carrying out an investment appraisal activity for a company named as The Zeta plc. The company has found an opportunity to manufacture a series of exclusive sailing boats over a period of four years and it is intended to dispose of the project after four years. However, the company needs to evaluate this investment opportunity as to whether it would be viable for the company on financial grounds or not (Baker et al, 2011). The overall project is mainly appraised by the discounted cash flow based techniques which include Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI) and lastly Discounted Payback Period (Dis. PBP). The theme of this article is set in such a manner that each of the above mentioned techniques are explained on their theoretical grounds and then the findings of the project of The Zeta plc are evaluated on the basis of underlying theories. At the last stage of this article, the main assumptions are stated which are used in conducting the investment appraisal of the project followed by the appendix in which the detailed workings are shown to arrive at the findings. ...
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