Investment Proposal

Investment Proposal

Introduction

It is the responsibility of the Sales Manager to inform their organization about the market performance of their products as compared to their rival's products. The managers are also responsible for timely generating reports and proposals so that the organization can take better future investment decisions. Therefore the as a sales manager a proposal has been made to enhance the performance of the existing products and in the existing markets. The proposal has taken into consideration different capital budgeting tools that will help the management in either accepting or rejecting a proposal or investment project. The proposal has identified the amounts of investments, years during which the investment will be retained, the rate of the returns and the target that need to be achieved in order to achieve the desired returns from the investment.

Discussion

The UK retail industry is highly competitive as there are many local and international brands operating in this sector. Thus every organization need to redesign its strategies and will have to make investments that will enable the organization to improve their performance with the present product line in the present market. As a sales manager I am using different capital budgeting tools that will help the decision makers in making easy decisions regarding the implementation of the investment proposal or not. The capital budgeting tools will also help in analyzing that the new proposal will either increase the value of the business or it will decrease the capital value of the firm. As the proposal is made for more than two years therefore it will provide a long-term picture of the proposal that either this proposal will provide benefits in the years to come or not. In order to develop the proposal I have used the capital budgeting process where first is the identification stage. Before making the proposal it is very important to identify the source of capital required for a project. The organization will have to make a large investment in the fixed assets for which the better option is to take loans as this will not challenge the ownership of the organization.

The second stage is to identify the costs and benefits. In order to find out the costs and benefits I have used the method of payback period and IRR. The payback period will help the decision makers in understanding that the investment made in the new proposal will be able to generate the results within two and a half years which is not a too long time period. The other method used by me is the internal rate of return method that is calculated to be 9%. This rate of return is more than the market rate which is 1.5% on average and will not exceed more than 2% in the years to come. On the basis of the market return the rate of return is more therefore it favors the organization to implement this proposal. It has also been proposed that use of straight line method will provide advantages to ...