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Investment Appraisal: Matero Corp - Essay Example
Finance & Accounting
Pages 6 (1506 words)
Investment Appraisal: Matero Corp Name: Instructor: Course: Date: Outline 1.0 Introduction 2.0 Net Present Value (NPV) 3.0 Internal Rate of Return (IRR) 4.0 Valuations of Equity 5.0 Consideration for Debt Financing 6.0 Reference Investment Appraisal: Matero Corp Introduction As a small growing construction company, Matero PLC requires a keen observation on the Net Present Value (NPV) and Internal Rate of Return (IIR)…
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 Matero PLC will decide to use debt financing, there is a hypothesis that the debts will generate higher payoffs for the coming years considering the risk factors that accompanies the borrowed capital. Finally, the management of Matero PLC will have to undertake the valuation of the company, of course, using four separate models for equity valuation. In order to eliminate errors, it will be vital to observe ways in which financial analysts use the models. Net Present Value (NPV) By definition, the NPV is an Investment Appraisal Methods which is the sum of the present values (PV) for all the cash flows that are expected to increase in the event that Matero PLC decides to execute the project. ...
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