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Essay / Research Paper Abstract
The 16 page paper considers the way in which the relatively small organization may assess a major capital investment. The example of Hotel Chocolat is used as a retail company that may need to increase the size of its operations. Potential issues in the assessment of the investment are discussed including timing, types of capital, potential impact on cost of capital as well as use of investment assessment tools. The bibliography cites 9 sources.
Page Count:
16 pages (~225 words per page)
File: TS14_TEmajorassin.rtf
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Unformatted sample text from the term paper:
retail firm that is facing increased demand, and needs to assess whether or not to make an investment in larger facilities to accommodate the demand. The issues that need to
be considered in terms timing, as the firm faces seasonal demand are assessed along with the potential sources of capital. The impact that different sources of capital may have on
cost of capital and potential performance and valuation of the firm are assessed, and then tools that can be used to determine the value of the investment, such as payback
period., net present value and internal rate of return are considered. These are all approaches that will be very useful for the firm assessing a major investment.
Table of Contents Executive Summary 1 1. Introduction 3 1.1 Company Background 3 2. Assessment Factors 4 2.1 Timing 5 2.2 Types of Capital 6 2.3 Cost of Capital 9 Figure 1 Comparison of different capital structures 12 2.4 Assessment
Tools 13 3. Conclusion 16 References 17 1. Introduction In any industry firms have numerous financial decisions, the replacement of existing
facilities, especially where a firm has outgrown its existing facilitates, can be one that has the potential to add value. However, the decision is not always easy; the increased need
for capital can have a number of knock on effects, increasing the cost of capital potentially decreasing profits in the short and long term, which requires consideration of the optimal
source of capital. Planning and budgeting as well as timing are also issues that need to be considered. 1.1 Company Background One company that may have to make this decision
is a UK firm is Hotel Chocolat, the firm offers a range of chocolate and other premium confectionary items. The company has been trading since 1993, set up by Angus
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