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Essay / Research Paper Abstract
This 13 page paper answers four questions set by the student. The first question demonstrates the calculation of a net present value (NPV) and an internal rate of return (IRR) on a project. The second part of the paper considers capital raising though debt and equity looking at the advantages and disadvantages. The third part op f the paper considers the role and potential approaches to risk management and the last part of the paper considers the effectiveness of the London Stock Exchange as a secondary market for selling securities in the context of increasing competition. The bibliography cites 5 sources.
Page Count:
13 pages (~225 words per page)
File: TS14_TEecolight.rtf
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Unformatted sample text from the term paper:
a discounted value. Therefore the first stage in the case presented by the student is to calculate the income and expenditure in order to gain the net cash revenues per
year. This is calculated by taking the number of units projected at being sold each year and multiplying them by the revenue per unit. This gives us the figures in
table 1. Table 1 Total Revenue Year Sales units Price per unit Total revenue 2008 100,000 70 7,000,000 2009 110,000 70 7,700,000 2010 120,000 70 8,400,000 2011 90,000 70
6,300,000 2012 80,000 65 5,200,000 Now we need to calculate the costs. For this there are variable costs and the overheads. The variable costs need to be calculated on a
per unit basis and then the overhead cost for the year to be added on. There are direct labour costs of ?20 and other variable costs of ?25 per
unit, giving a total variable cost of ?45 per unit. Using this variable cost and the overheads we can look at the total costs per year. There is a
discrepancy in the way that these can be calculated. The usual method of allocating overheads is through a proportional allocation based on 50% of the wages. This is a process
of absorption costing. Using this method of allocating the overheads we get the costs in table 2 Table 2 Total costs with absorption costing Year Sales units (a) Variable costs
per unit (b) Total variable costs (a x b) (c) Fixed costs (a x ?10) (d) Total costs (c + d) 2008 100,000 45 4,500,000 1,000,000 5,500,000 2009 110,000
45 4,950,000 1,100,000 6,050,000 2010 120,000 45 5,400,000 1,200,000 6,600,000 2011 90,000 45 4,050,000 900,000 4,950,000 2012 80,000 45 3,600,000 800,000 4,400,000 However absorption costing is not always accurate, there
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