Net Present Value College Essays Samples For Students

QUESTION 1;

Part A: Net Present Value calculation
Working capital will be regarded as the initial investment outlay which is £ 1 million. Discount rate used in calculating the net present value of the project is 7%. The internal rate of return will be hypothetically obtained with the aim of obtaining the break-even situation of the project.
All costs and expenses are treated as cash outflows which will reduce the cash inflow in the project i.e. the project’s sales revenue. The cash outflows from the entire project will be deducted from the project’s inflows so as to determine ...

PART I

Firstly, Firms acquire other firms in order to gain a larger market share and gain a competitive advantage. A firm may acquire another firm in order to improve its marketing and distribution network or acquire the clientele base of its competitor. Secondly, firm acquire other firms in order to diversify their market. A firm may acquire another firm operating in a different industry or in the same industry but a different market segment in order to diversify. Diversification is a risk management tool. Thirdly, a firm may acquire another firm in order to reduce its production and operational costs. Acquiring other firms creates opportunities for ...

There are different methods used in capital budgeting. They include the net present value, profitability index, internal rate of return and payback period. This research paper will evaluate the differences that exist between these methods basing the argument on the strengths and weaknesses of these methods.
The net present value method is used to determine whether a certain project should be invested or not. It is obtained by summing the present value of the future cashflows of a project. On the other hand, profitability compares the present value of the future cashflows to the initial capital outlay of a project in ...

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Introduction

The concept of corporate finance lies in time value of money and is often regarded as the foundation of the corporate strategy as well as the financial management. The concept of net present value is applied in a number of financial decisions and the time value of money is dependent on the same principle. Therefore, this paper will be focused on the importance of the time value of money based on the concept of net present value. This concept is clarified by using the example of bond valuation as mentioned in the question. However, this paper is ...

Introduction

This report is about the evaluation of an attractiveness of one project of Wall-Mart using different methodologies and measures taking into account different theories. The main purpose of this investigation is determination of the advantages and disadvantages of the different methods and it is necessary to make a decision about investment in this Wall-Mart project using all computed values.

Present value is a parameter which reflects the present value of future cash flows that have been discounted. To calculate a present value it necessary to use the following formula:
Present Value=i=1nCFi1+ri,
where n is number of periods,
r ...

Introduction

In every investment decision, it is necessary to scrutinize the benefits and cost before venturing into it. An investor should evaluate the benefits he or she would get if they invested their capital in the project rather than depositing the cash in the bank to accumulate annual interest. A project manager is solely responsible to decide on behalf of his clients on the best project to invest from a pool of several and closely related benefits on behalf of his client. The key factors that the manager would consider are rate of return on investment, period it would take the ...

Introduction

We know that the money we are having in hand now is more valuable than the money collected later. This is due to the fact that we can make money right now by putting the money in business, purchasing something, selling it later like stocks or depositing in the bank to earn interest. But the future money is always less valuable. This is known as time value of money (TVM). Future money is always less valuable due to inflation. So how do we compare the value of money now and the value of money in the future. This is ...

Net Present Value

The Net Present Value is used in estimating the potential value of every project by applying the discounted cash flow valuation that requires an estimation of the size and time of all cash flows that increases from the project (Ehrhardt & Brigham, 2016). However, NPV is affected greatly by the discounting rate. Therefore, making a selection on the proper rate that is sometimes known as the hurdle rate is essential during decision making. Moreover, this should make a reflection on the riskiness of the investment because it is typically measured by the unpredictability of cash flows. Therefore, it must take ...

Introduction

This paper evaluates the estimated returns of two investment projects; locating a production facility in Bangalore and Mumbai. The basis of evaluation is average rate of return on investment, payback period,profitability index, net present value, and internal rate of return. Further, this paper discusses other factors that need to be considered.

Average Rate of Return on Investment

This method evaluates a project using accounting profits. It is computed by dividing the average income by the average investment and then converting the result in to percentage. Normally, a project with a higher average rate of return would be preferred. Locating a production facility in Mumbai would result in a 20 % average ...

There are various techniques used to evaluate viability of investments and in comparing different investments. These techniques include net present value, payback period, accounting rate of return and internal rate of return . Net present value is preferred when evaluating projects because in takes into consideration time value of money unlike Payback period and accounting rate of return. Although internal rate of return considers time value of money it is confusing to compute and conceptualize .
Net Present value is computed by discounting annual cash flows at a given discounting rate. Annual cash flows are determined by subtracting annual cash outflows ...

Phil Mark Consulting

Harris Jackson
Dear Sir,
RE: Decision regarding the choice of contract between San Francisco 49ers and Dallas Cowboys
I am writing this letter regarding the contract decision for Mr. Harris. Based on the cashflows that Mr. Harris will receive from either of the teams, I used the Net Present Value method to determine which contract will serve Mr. Harris’ financial interests. I chose the San Francisco 49ers contract over the Dallas Cowboys one based on the expected cashflows from either of the teams. I forecasted the cashflows at the given current discount rate of 8% which factors in the ...

Part One

Risk
There is no standard way to define risks. However, one of the definitions of risk is the probability that the return on an investment will be lower than the expected return (Business Dictionary, n.d.). Examples of risk include business risk, transactional risks and exchange rate risk.

Beta

Beta is a measure of systematic risk of a stock. The value measures the volatility of the stock compared to the volatility of the market (Forbes, n.d.). The value of Beta can be either positive or negative while the beta value of the market is always one. As such, in interpreting the ...

Section 1

There are several advantages of choosing a finance officer to the chief executive officer position. To begin with is the knowledge of the business the finance officer has concerned the company. In addition to the financial knowledge of the business, the financial officer understands how it functions at the executive level. Having he grasp of the company's financial picture, this enables him to implement the financial recommendations from the chief executive officers' position than in the financial officers' position.
Secondly, the chief financial officer has the understanding of running a business in a cost effective manner. Has the knowledge of deciding ...

In this paper, various capital budgeting techniques are calculated from the given data which help the financial and project managers to analyze to whether pursue and accept any given project or not . In other words, these techniques depict the idea attempting to magnify the feasibility of any project to create value for the business . These Techniques are mentioned and calculated as follows using the MS-Excel spreadsheet the calculations of which are shown in the Appendix section:
It is important to mention that to compute the internal rate of return (IRR), the net present value were computed using two ...

One of the universally accepted goals of any firm is to maximize the wealth; this objective states that all the decisions taken by the managers should always be focused upon maximizing the wealth of the firm’s shareholders. In simpler words, this means that when taking any decision in the business, the manager must make sure that it would eventually add to the riches of the shareholders and each decision must generate net present value (Jones & Felps, 2013). Net present value refers to the difference between the present values of the costs of any project with the present value ...

Task

Compare the corporate form of organization with the sole proprietorship and the partnership.

Describe the principles dealing with ways of creating value and economic efficiency

The major principles include comparative advantage and absolute advantage. Comparative advantage is the ability of a country to produce a particular commodity in a more efficient way than other countries. Countries that have modern machinery are likely to produce machine intensive products than other countries.
Absolute advantage is the ability of a county to be able to produce a particular commodity that other countries do not produce. For instance, a country that is endowed with a unique mineral that is not produced by other countries can be said to have absolute advantage ...

The evaluation of the company’s project or product can be carried out using Net Present Value (NPV) analysis. The NPV analysis involves forecasting of future cash flows that the business expects to generate from the new project or its product. The cash flows are discounted using an appropriate discount rate that is the cost of capital of the company. The cost of capital is the cost of funds acquired by the company from different sources including equity and debt. The sum of present value (discounted value) is deducted from the initial investment cost to determine the net present ...

INVESTMENT ANALYSIS OF VIETNAM

INVESTMENT ANALYSIS OF VIETNAM

Summary

Vietnam has changed in the last thirty years from an agrarian country to a service and manufacture country leader in the world in growth and economic activity. The country has a communist system legally but, in the practice, the country has a liberal policy in the economy signing the Trans-Pacific Free Trade Agreement but maintaining the political control under the rule of one party. The country offers opportunities and risks for individual and corporation with the intention to invest.

Introduction

Vietnam is known in the world as the country where United States of America lost a ...

Problem:

A company is considering two projects, Project A and Project B with different cash flows as disclosed in the table hereunder:
However, since the company has a limited budget, it can only invest in one of the project. Thus, the managers of the company take the help of capital budgeting techniques, NPV analysis and Payback Period.

NPV Analysis:

The NPV is the sum of the present values of all the expected incremental cash flows if a project is undertaken. The discount rate used is the firm’s cost of capital, adjusted for the risk level of the project. In other words, the ...

Business

Net present value is one of the most widely used financial methods for the investment appraisal. The first advantage of using the NPV method of investment appraisal is that it incorporates the time value of money. Moreover, the discount rate or cost of capital used in the calculation of NPV of any project is calculated after taking care of all the financial structure and tax adjustments of the business. This discounting factor also contains the risk and inflation adjustments which provide accurate time value of money. Another advantage of the NPV method of investment appraisal is that it uses ...

Introduction

Companies usually make investments in order to derive a return on the investment. There are investment projects that are good or bad depending on whether they add any financial value to the company. Therefore, there are various capital budgeting techniques that are used to evaluate the financial soundness of an investment project in order to ascertain whether the project should be accepted or rejected. This paper seeks to evaluate ABC Company new inventory management system to ascertain whether it is a good investment or a bad one using various capital budgeting tools.

Payback period evaluates investment projects basing of the duration needed ...

INTRODUCTION

Conch Republic Electronics is a medium sized electronic manufacturing organization. The company has been operating over the last 70 years and during this time period; it has expanded its product range. The company also manufactures Smartphone. The previously introduced Smartphone has been highly successful in the market and therefore the management is planning to decide whether to invest in the new Smartphone or not. For this purpose, this report uses different capital budgeting techniques to analyze whether the company should accept the project and start manufacturing new Smartphone or not. Different capital budgeting techniques have been applied such as payback ...

About the report

The report is commissioned to ascertain the financial viability of the capital project being considered by North Sea Oil. As part of this project, we will calculate the Net Present Value(NPV) and Internal Rate of Return(IRR) of the projects under two different set of cost of capital, and will comment as how the change in capital structure will affect the shareholders accordingly. The eventual purpose here is to come up with a prudent recommendation for the company as which project will be more profitable for the company and what proportion of capital structure will be more viable ...

Business Decision Making 3 of 3

A Gantt chart is a scheduling technique used to assign a time scale and sequence to a project or plan. A Gantt chart comprises of horizontal bar charts drawn to scale for every project activity. The length of the horizontal bars shows the time to attain completion (Ghionea, 2014). The steps involved in the creation of Gantt charts include the establishment of horizontal axis to represent time, use of vertical axis to represent activities, and representation of each bar using suitable length. The activities represented by the Gantt chart include lot preparation, creating footings, establishing foundations, and framing.
Figure ...

1.
When I was at the high school, many professors said to me the importance to acquire managerial skills to grow in organizations and to have financial skills to have control of my finances. I did not have the intention to abandon my career because I love the idea to design and develop new products, but I knew that a 9-to-5 job does not have the possibilities to convert me into a rich person, but at least I wanted to develop the financial skills.
In 2005, when I finished the high school, I started to work in a restaurant ...

Business Finance Finals

The situation presented in the situation with client one is the for a business to survive a proper cash flow should be in place. The behavior of the person involve would also be barrier or a good mark on how they handle their financial management. As this is noted in the study of (Almeida, Campellow and Weisbach. 2004) in which they captured that “two important areas of research in corporate finance are the effects of financial constraints on firm behavior and the manner in which firms perform financial management”. In the line of the different of profits and cash ...

The cash payback period is that period which cash for the investment project is borrowed and that time which is to be paid back. Therefore, the cash payback period will be;
Cash payback period = Initial CostAnnual Cashflow = 750,000/170,000 = 4years 5 months
The net present value of the project refers to the present values of an investment especially using time to evaluate an investment. Therefore it is given by;
Net present value; 1st year = (750,000 × 12%) = 90,000
2nd year = (840,000 × 12%) = 100,800
3rd year = (940,800 × 12%) = 112,896
...

1. The present value of the incremental cash flows needs to be calculated as part of judging the feasibility of the merger. The acquisition price of hybrid added to the dividends paid currently would give us a total of $(320,000,000). Similarly, the given data may help us calculate the 5 year cash flow for Birdie Golf. In year 1, the total cash flow would be $31,080,000 and by the end of year 5 this would increase to $1,005,640,000 as the terminal value of $720,000,000 would be earned in year 5. (Ross, ...

Individual Assignment

MBA Programme
Issue Date: July 30, 2012
Table of Contents

Table of Contents
2
I.
Introduction and Problem Identification
3
II.
Analysis
4

A.
Calculation of Earnings from Investment in Securities
4

B.
Calculation of Project Cash-Flows
5
C.
Funding the Proposed Project
9
D.
Calculation of Project Cash-Flows
9
III.
Conclusion and Recommendations
10
IV.
Calculations
11

I. Introduction and Problem Identification
The Unit Building Company (UBC) is an established private company ...

Capital budgeting

Weighted average cost of capital is the least rate of return that investors expect. It is computed by obtaining the component cost of each source of capital which is then multiplied by the weight or the proportion of the source of capital in the whole capital structure. The weighted capital component costs are added to obtain the WACC. WACC is used as the discounting rate of projects to determine the NPV of an investment project. A positive NPV will be obtained if the rate of return on an investment is higher than the weighted average cost of capital. This ...

1. The Cost of Capital
1.1 Relationship between the Cost of Capital and Hurdle Rates
The cost of capital is an expected rate of return on the investment. It helps define if the investment is worthwhile. The expected return on investment is supposed to be greater than the cost of the capital. It can also be described as the risk-adjusted return on capital. The cost of the capital consists of two parts: the cost of debt and the cost of equity. The cost of the capital is often used as a discount rate when calculating the projected cash ...

Abstract

Decision-making under risk occurs when there is an uncertainty about the states of nature that can occur, but the probabilities of each of the states of nature occurring have already been determined. We can use these probabilities to determine additional strategies for decision-making. One such strategy is the Expected Monetary Value (EMV) approach for making an optimal decision. In the problem where the company had to decide on the right investment approach, the company had already done research to determine the various possible states of nature for each of the alternatives as well the probabilities of each of these ...

The goal of marketing activities, ultimately, is to create and deliver value to existing and potential customers. At the core, value in a marketing context, is defined as the net difference between the total expenditure that a business organization makes and the cumulative revenues generated from the sales/utilization of a product or service. From the end-user’s perspective, value is a more subjective concept in that it is extent of the benefit that an individual derives from purchasing, using and consuming any brand (Möller 913).
An important point that marketers need to understand is that every member of ...

Investment Proposal for Cengage Learning, Inc.

Executive Summary

Purpose of the Paper
The main purpose of the paper is to prepare an effective investment appraisal for Cengage Learning by using various financial management tools.

Overview of the Paper

The paper comprises of following material that can be seen in the overall paper.
Investment appraisal techniques for introducing new product line
Selection of two most common techniques
Importance of techniques through literature
Testing of Feasibility of new project
Interpretation and conclusion on the analysis
Techniques Used
Results
It is found from the above two analysis that the project is viable for the company and has potential to provide high return ...

Chapter 1: Introduction 3

Chapter 2: Financial Performance and Position of TESCO 6
Chapter 3 Financial Management Policy 14
Chapter 4 Investment Strategy 18
Chapter 5 Valuation of TESCO 22
Chapter 6 Conclusion 26
Abstract
The present report provides critical analysis of financial positioning of Tesco Plc. For this, the financial data has been gathered for past five years as well as its competitors to critically assess financial positioning of Tesco in the retail industry. The reports highlight the recent issues of Bretix which has significantly impacted economic conditions of the United Kingdom leading to declining the consumer confidence because of triggering inflation. ...

LIMITED LEVERAGE

One thing that is clear from the vignette is Frank does not want to close his business and work for someone else. However, he must replace his primary asset, his truck, or he will be forced to close the business. Since he does not have the equity to purchase the truck, he must find the funds somewhere else. The only options are to find an investor or borrow the money. The vignette mentions nothing about an option to find an investor. He is adamantly against using debt. His daughter Stephanie suspects he does not know the proper use of ...

Limited leverage and business

A majority of small business are discouraged from having high leverage ratios. In this case, Frank having a small proprietary, is unaware of the benefit that the business might be having with leverages. Subsequently, his fears are based credit being expensive. According to McCabe and Yook (2011), with the cost of finance fixed, the increased revenues attributed to these credit finance, offers cushion on writing off the loan because it will generate more earnings. However, it is only when well managed that credit will be of advantage to the company or business. In excess, the liability increases the third ...

Part 1:

There are several benefits associated with higher education. In the competitive global era, it increases the chance of employability of an individual i.e. an individual having the advanced university degree will have higher chance of being employed. Pursuing a higher education, the student gets the opportunity to explore new horizons, which go undiscovered with an ordinary graduation degree. The degree also acts as an addition to the value of individual’s profile. The MBA (Master of Business Administration) from a recognized institution helps to qualify for better placement assistance. Additionally, it will elevate the individual’s level on the ladder of ...

a) & c)
The liquidity ratios show that the company has got the ability to pay off the short-term liabilities from its current assets. The current ratio and the quick ratios are both satisfactory and show the liquidity situation of the company. The decrease of the Current, Cash and Quick ratios is due to the heavy investments in the research and development .
The profitability ratios show that the company is earning above average returns. The brand Apple is known globally and the customers prefer the brand instead of others. The gross profit margin showed an increase in the year ...

Recommendation

I would recommend the company to accept the proposal since it will add value to the firm. This is because the proposed project is viable as indicated by the calculated measures. The payback period for the project is 3.43 years. Payback period is the time a proposed investment takes to accumulated sufficient cash flows to recover the initial cost of the investment. In this case, the proposal will take 3.43 years to recoup the initial cost of $200,000. In the absence of a desired payback period, we can compare the proposal’s payback period with its useful life. The proposal’ ...

Simulation is one of the best methods, which helps to evaluate the risks of investment decisions. This method makes use of probability distribution and imitates the performance of project under assessment . The simulation selects random observations from each distribution that affects the output of a project. The process continues as many times until the generation of a representative distribution of the probable outcome of the project. In the simulation approach, the inputs are various factors that affect the profitability of the project, while the output is a representative probability distribution of the internal rate of return or net present value of the ...

NPV= A1/ (1+k)1 + A2/ (1+k)2 + A3/ (1+k)3 + An/ (1+k)n – C

Where; A- Annual cash flow

k- Cost of capital

C- Initial investment

n- Number of years

Therefore;

NPV= 450,000/ (1+0.11)1 + 639,000/ (1+0.11)2 + 700,000/ (1+0.11)3 + 550,000/ (1+0.11)4 + 1,850,000/ (1+0.11)5 – 2,425,000
= 450,000/1.1 +639,000/1.232 + 700,000/1.368 +550,000/1.518 + 1,850,000/1.685 - 2,425,000
= 405,405.41+518,668.83+511,695.91+362,318.84+1,097,922.85-2,425,000
= 2,896,011.84-2,425,000
NPV = 471,011.84
The NPV ...

The process through which the companies authorize the spending of capital on the long-term projects is known as the Capital budgeting. Capital projects require careful evaluation due to the limited availability of capital. There are many different techniques for capital budgeting but the most significant ones are the NPV and the IRR. The Net Present Value (NPV) is the method that determines the project worthiness by taking into consideration the devaluation of the money with time. Internal Rate of Return is that rate which is determined by the investor on a particular risk to forecast a profit (Arnold & Nixon et al., ...

(Instructor Name)

First Gulf Bank (FGB) is one of the largest banks in the UAE, with a range of services ranging from corporate banking to consumer banking. The bank was awarded the “Best Bank in United Arab Emirates” in 2013 at the Banker Middle East Industry Awards 2013, and features in the Forbes list of Top 500 Companies in the Arab World at the sixth rank, and the third in the UAE (FGB, 2014).
The average per capita income in UAE was approximately $41,000 per annum in 2013 (World Bank, 2014). Assuming the average FGB customer earns at ...

Question 1

Inflation is a general rise in commodity prices. Inflation affects traditional profitability measures since such measures ignore the time value of money. Traditional measures are constrained by the fact that initial costs are valued at the historical value while cash flows or benefits are valued at current prices. In periods of inflation, traditional profitability measures will be misleading.
Cash on cash return is given by the ratio of after-tax cash flow and equity investment. It is commonly used in evaluating real estate investments. The ratio gives the amount of money a project generates for every unit of equity invested in ...

Every person is born with a different mindset and thinking in this world, and on the basis of this mindset and thinking, they will take different aspects accordingly. On the basis of the mindset, an individual will select a desired career for them. The clearest intentions behind selecting and addressing a particular career depends upon the fact that how much future benefit it will give or arise for the individual in particular (Peterson, Fabozzi & Habegger, 2004). The aspect of return on Investment (ROI) is the most important aspect that strides under the analysis of development or pursuing a career. In this particular assignment, ...

Abstract

The ability to bring more revenues in the future is a major factor determining the choice of the type of project to invest in. The popular profitability metrics include NPV, PI, Payer Mix, and ROI. The above metrics were used to make a choice of investing into building a rehabilitation center, other than building a neonatal center. The benefits of investing into a project of constructing a rehabilitation center have more future financial benefits than investing into a neonatal center. This is because Medicare and Medicaid cover most patients in neonatal centers; therefore, there are a little financial benefits as compared to financial gains in rehabilitation centers ...

- The 3D auto stereoscopic tablet operates on an android platform which is provided by Google. The tablet offers very high resolutions and can switch from stereoscopic mode and convert 2D into 3D. The competitors that are going to market the auto stereoscopic 3D tablet are the device manufacturers which use the android platform on their devices. These are companies like Google, Samsung and Huawei who have over the past few years used the free android platform to market their devices. The marketing will start as soon as these companies start producing the devices. The 3D auto stereoscopic tablet ...

1. An efficient market hypothesis which also known as the random walk theorem assumes that the obtaining stock prices completely reflect all the information available about the value of a firm or stock. It proposes that in no way can the excess profits be made on the overall (Clark, et al). It is also given that most investors try to be on a look out for undervalued stocks and securities which are expected to increase in value in the near future, especially securities that are more volatile than others. These investors who include investment managers have believe that they can select ...

Capital Budgeting

Capital Budgeting is a management tool used in investments appraisal. The management of an organization needs to determine the long term investments to be undertaken by an organization. The duty lies on the financial manager to determine the investment project with satisfactory rate of return and cash flows. The manager should evaluate, compare and select the best investment project (Gil, 2005).
Budgeting decisions are important to an organization for they assist in allocation of resources to the best investment decisions that will maximize the returns. Capital in every organization is scarce hence budgeting helps to control funds in the ...

CORPORATE FINANCE

Primary objective of any business is to maximize shareholders wealth; market price of shares of public corporation reflects the value of corporation as seen by its owners and also takes into account the complexity and complications of the real business risk (Fam, 2012). The unifying objective of the corporate finance is to maximize the share value of the company (Van, 2006). Therefore the decision makers of the company always take the decision that will maximize the above objectives.
In capital budgeting the finance managers usually chooses the investment with the highest return which in turn will leads to ...

Appraisal is the process of valuing the real value of properties, and in most cases the value that is sought is the property Market value. Appraisal is important because most properties differ from each other in the place they are located and this is considered as an important factor in value determination. Appraisers are needed as advisers on the property value, and in most cases they provide written reports on the value. The most used approaches in development appraisal are discount cash flow and residual method.
Residual method is used to calculate the value of a site with development, ...

Question 1

In real life, there are assignments that qualify to be projects. The installation of a lift on an 18 floor building and the installation of window glasses into a new house are both projects. The installation of a new lift on a building is high-tech and requires trained personnel, a lot of time, incurs a lot of costs since it involves buying electronic equipment and high quality materials. Installation of window glasses is low-tech. It involves a smaller scope of competence, the costs of undertaking the project are low and the time used to finish this project is little .

Question 2

Project 1 should be implemented because it ...

Question 1

Analyze the relationship between the marginal cost of capital and foreign investment analysis.
Marginal cost of capital is the cost connected to raising an additional unit of capital. The marginal cost of capital depends on the type of capital that will be used and the associated risks. Marginal cost of capital is important in foreign investment analysis because it is used to determine foreign projects that are to be undertaken and those that are to be rejected. A foreign project can only be accepted if its rate of return is greater than the marginal cost of capital. It ...

Answering Questions about Management, Accounting and Finance

1A. why is it taking so long to have a Facebook IPO?

According to one of the Facebook insiders there are several reasons why Facebook is taking so long to do an S1 filing. One is that they have not decided yet as to which banks will do the underwriting the offer. As of December 2010 the social networking giant had raised $1.5 billion with an estimated valuation of $50 billion, but co-founder and CEO Mark Zuckerberg has does not agree to the idea to rush the company into IPO because as of this time their main concern is to ...

Declaration
This is to certify that the dissertation entitled “Gaining Strategic Advantage through Customer Value”, presented by me to the University of South Africa for the award of the degree of Master of Business Leadership is a bona fide record of research work which was carried out by me under the supervision of Dr Sidney Shipham. The contents of this dissertation in full or in parts have never been submitted to any other Institution of higher learning for the award of any degree or diploma.

Acknowledgement

I would like to express my gratitude to my study group members of the ...

Question 4: Discuss the implications of the real options likely to be embedded in a multi-million pound capital budgeting decision on whether or not to accept such a proposed investment project and compare and contrast real-options with financial options (25 marks)
Real option techniques are increasingly being used as the standard method of evaluating investment decisions whose uncertainties are quantifiable. Capital budgeting decisions are long-term strategic decisions that impact directly on the organization’s efficiency of its daily operations, cash flow, income statement, and the taxable income for the subsequent years; however, most organizations treat them as operating budget decisions. ...