Methods of Investment Appraisal & Financing Projects

A property company wishes to develop a site it owns. Three sizes of property are being considered and the cots and revenues are as follows:

The projects are mutually exclusive because the building of one size of development excludes the others. The following results were obtained for the payback, NPV and IRR calculations using a cost of capital of 10%:

You are asked to use the data presented above to critically evaluate the various advantages and disadvantages and limitations (if any) of using the payback, NPV and IRR as alternative methods of investment appraisal.

A family owns a chain of supermarkets in the form of a private company. Its present annual turnover is just over 200 million Euros and is currently entirely owned by the five family members. The company wishes to finance the building of a new supermarket which will take two years before it can start operating profitably. The company needs 30 million Euros to build the supermarket. Critically evaluate the various methods which are available to the owners to finance the project.

• Your reports should be clearly and logically structured in whatever format appears to be the most suitable for supporting the analysis, arguments, conclusions and recommendations.
• Key points may be summarised as a bulleted list to optimise the use of your words.
• Tables, graphs and charts are a convenient way of organising your findings and presenting data. They also make it easier for the end user of your report (and the marker) to understand your findings and so you are recommended to use visual aids where appropriate.

• The submission of your work assessment should be organised and clearly structured.
• Maximum word length allowed is 3000 words, excluding words in Charts & Tables and in the Appendixes section of your report.
• Student is required to submit a type-written document in Microsoft Word format with Times New Roman font type, size 12 and line spacing 1.5.
• This assignment is worth 100% of the final assessment of the module.
• Indicate any sources of information and literature review by including all the necessary citations and references adopting the Harvard Referencing System.
• Students who have been found to have committed acts of Plagiarism are automatically considered to have failed the entire module. If found to have breached the regulation for the second time, you will be asked to leave the course.
• Plagiarism involves taking someone else’s words, thoughts, ideas or essays from online essay banks and trying to pass them off as your own. It is a form of cheating which is taken very seriously.

Learning Outcomes tested in this assignment

Upon successful completion of this module the student will be able to:

1. Demonstrate a critical awareness, comprehension and synthesis of a business and its future prospects.
2. Identify, organise, analyse and critically evaluate financial information, articulate conclusions and form recommendations, based on a disciplined, thoughtful and well-structured appraisal of the evidence and founded on clear theoretical underpinnings.
3. Structure and communicate ideas based on an understanding and appreciation of the practical application of key issues and theories in corporate financial management.
4. Display an ability to evaluate complex business issues, synthesise concepts and to formulate and propose advice based on informed judgement.
5. Articulate conclusions and make recommendations, in an independent manner, which are based on informed analysis and critical appraisal.

Plagiarism is passing off the work of others as your own. This constitutes academic theft and is a serious matter that is penalized in assignment marking.

Plagiarism is the submission of an item of assessment containing elements of work produced by another person(s) in such a way that it could be assumed to be the student’s own work. Examples of plagiarism are:

• The verbatim copying of another person’s work without acknowledgement
• The close paraphrasing of another person’s work by simply changing a few words or altering the order of presentation without acknowledgement
• The unacknowledged quotation of phrases from another person’s work and/or the presentation of another person’s idea(s) as one’s own.
• It also includes self-plagiarism' (which occurs where, for example, you submit work that you have presented for assessment on a previous occasion). And the submission of material from 'essay banks' (even if the authors of such material appear to be giving you permission to use it in this way)

Copying or close paraphrasing with occasional acknowledgement of the source may also be deemed to be plagiarism is the absence of quotation marks implies that the phraseology is the student’s own.

Plagiarised work may belong to another student or be from a published source such as a book, report, journal or material available on the internet.