Finacial Management Investment Appraisal and Finance of "New Printer" Project

Introduction

Wheybridge Ltd has developed a new product- the printer, which has great potential, can be sold to all computer users. However, the sales would exceed the vivacious capacity. Wheybridge has to develop its own delivery, recruit staff and purchase vehicles. hence it is necessary to budget the investment funds amount and analyze on tap(predicate) finance sources to invest this project. Moreover, with the aid of investment appraisal, managers should make a decision whether to invest the project and anticipate the profits and risk.

1. investment funds Budget

1.1 investment Budget of Fixed Asset

The fix asset investment includes plant constructing, vehicles purchase and staff training. The table below shows the typography of fix asset investment:

Num. Item Amount( ) Percentage in total fixed asset investment %

1 Constructing 1,500,000 50%

2 Vehicles purchasing 100,000 33.3%

3 Staff training 40,000 13.3%

4 Provision 10,000 3.3%

5 Investment on fixed asset 3,000,000 100%

1.2 Investment Budget of workss capital

running(a) capital is defined as the difference between true assets and current liabilities.(Jaffe, Ross and Westerfield, 1998) It must maintain an investment in working capital. The calculation of working capital adopts subentry calculation method. According to the fancy of production, inventory, sales, and referring to the average working capital in the printer industry , the working capital of this project is approximately 1,000,000.

1.3 Total Investment Budget

Total investment = Investment of Fixed Asset + Investment of working capital

= 3,000,000 + 1,000,000

= 4,000,000

2. Finance of the Project

There are various sources of finance for the company. The source of finance should be chosen according to the situation and features of the project. Four sources of finance can be adopted for Wheybridge Ltd. They are retained profit, money box loan, ordinary shares and venture capital.

2.1 Internal sources of finance

Retained profits

Retained profits...

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