Essay sample - Investment Appraisal Project

Investment Appraisal Project  Essay example
Masters
Essay
Finance & Accounting
Pages 8 (2008 words)
Download 0
INVESTMENT APPRAISAL PROJECT GRYON LIMITED STUDENT NAME:___________ Contents INTRODUCTION OF THE PROJECT 3 CALCULATION BASED ON DISCOUTNED CASHFLOW 5 SENSITIVITY ANALYSIS 7 THEORTICAL DISCUSSION BASED NPV AND IRR METHOD 9 CONCLUSION 12 INTRODUCTION OF THE PROJECT The company Gryon is considering an operational expansion and has decided to buy one of the two freehold lands available…

Introduction

WACC=wdkd(1-T)+wpkp+wsks Where  Kd = interest on debt  Kp = cost of preference shares  Ks = cost of shares and retained earnings.  WACC is calculated by multiplying the cost of equity by the market value of the equity and cost of debt by the market value of the debt. Cost of equity can be defined as the minimum rate of return that a company must generate and offer to their investors in order to provide a return on their investment and for assuming some level of risk. If the company does not offer this risk to the investors, there is a chance that the shareholders might sell these shares in the market. Selling of the company shares can be interpreted as a negative sign for the financial outlook of the company and will put a downward impact on the market value of the company. Cost of company’s equity can be calculated through ‘Dividend Growth Model’ and ‘Capital Asset pricing model.’ The formula for dividend growth model is as follows. E = Do Ke - g Where E is the market value of the equity, Do is the recent dividend paid or the dividend projected for the next year, Ke is the cost of the equity and g is the growth rate of the dividend. ...
Download paper
Not exactly what you need?

Related papers

Investment Appraisal Techniques
Some of the investment appraisal techniques used range from Net Present Value (NPV), Accounting Rate of Return (ARR), Internal Rate of Return (ARR) and Payback Period. Net Present Value (NPV) As one of the investment appraisal techniques, net present value (NPV) method ensures that the value of all the expected future cash flows is calculated into the present values (Droms, & Wright, 2010). More…
5 pages (1255 words)
Investment appraisal and NPV analysis
Capital Budgeting is the other name for Investment Appraisal. Every firm, company or enterprise is faced with the decision about which investment opportunities they are to choose from all the options available. The primary task of any enterprise is to maximize the wealth of its shareholders. So taking the right decision at right time is one of the key roles of any company. It is required for the…
8 pages (2008 words)
Investment Appraisal: The Zeta plc. Case
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…
6 pages (1506 words)
Investment appraisal under uncertainty
Literature review Real option valuation calls for an elaborate and a firm strategy to form a conceptual tool to make the decision for the company (Kim & Sanders 2002). The most appropriate tool to be used in uncertainty cases is using real option as a technique to assess investments for contexts with high market, technical and technological uncertainty (Billington, Johnson & Triantis 2002). This…
5 pages (1255 words)
Project Appraisal
. 4 Discussion……………………………………………………………………………………… 6 Recommendation……………………………………………………………………………….9. Conclusion………………………………………………………………………………………10 Introduction Project appraisal is a structural process through…
8 pages (2008 words)
Investment Appraisal
Investment Appraisal …
9 pages (2259 words)
Investment Appraisal: Matero Corp
The management will have to evaluate the projects which will generate stable cash flows for Matero PLC for at least 1 year. From the onset, we consider the possible consequences of Matero accepting or rejecting the project of procuring the machinery and plant. For this reason, we emphasise on the determination of the cost of capital whether there will be any form of financial leverage or not. If…
6 pages (1506 words)