Finance Management



Financial Management

Answer 4)

Other factors:

Other factors that company shall consider in deciding which project company shall adopt are as followed:

Project duration i.e. how long it take to cover up the initial investment.

Real value and assumptions for cash flows (Gitman, 2008)

Uncertainty of the economic condition which has direct relation with the expected demand.

New equipment might increase productivity

Information of the market demand

Reasonable cost of capital (Baker, English, 2011)

Sensitivity Analysis

Total Incremental Cash Flow would need to reduce by £2,659,95 over 10 years to reduce NPV to “nil”.

Need to convert this to an annual figure using the Cumulative PV Factor ...