HND 财政预算 Outcome 34

HND 财政预算 Outcome 34 Part B In Part B, It will have four different ways to evaluate financial performance and give recommendations for Matteck PLC. These ways are ARR ,Payback, NPV and IRR. 4.0 Using four different methods to evaluate the financial. 4.1 Identify the accounting rate of return. Calculate process can see the Appendix 3. Show that the company should have at least 15% return, by calculating accounting 8%. Therefore, the data is relevant in line with company standards. rate, ARR was 12. 4.2 Identify the payback. The company hopes to recover the cost of investment within 4 four years. In fact, they just use the 3 years 341 days. Calculate process can see the Appendix 4. 4.3 Identify the Net present value. And establish whether the present value of the net present value method to calculate the cash inflows and outflows. Basically, NPV provide an objective assessment and selection of investment projects. In addition, it takes into account the required rate of return on the company, then think about the time value of money. But there are a lot of uncertainties in our world. Such as inflation and deflation, the RMB exchange rate. Calculate process can see the Appendix 5 When the Matteck’s cost of capital is 10%. The NPV is (46200). The NPV value less than 0. The company should not invest this project. 4.4 Identify the Internal rate of return. Calculate process can see the Appendix 6 When the present value of the 5% internal rate of return is 9.39%. One company is less than 10% of the standard. Therefore, the company should invest in this project. 5.0 Recommendations According to the four methods IRR and payback period for this project is not only to achieve, but the NPV and IRR not implement this project. In this case, the company should focus on NPV and IRR.By calculating the net present value, it seems deficit, which means that the annual cash flow is not sufficient to allow more benefits to deduct, still repay the original investment. This investment is not worth it. Within five years. All market factors are changing. Information will be different changes. There may be some other happening. So Matteck PLC should abandon this project. 6.0 Conclusion Reports can improve the budget capability, then by analysis of variance and four methods used to evaluate the financial companies.We recommend by helping companies to choose the best investments to help companies increase profits and choose the greatest profit projects. 7.0 Reference Scottish Qualification Authority, (5/2010), Preparing Financial Forecasts. China Modern Economic Publishing House, China. Appendix 3 Part B – Accounting rate of return Appendix 4 Part B – Payback Appendix 5 Part B –NPV Annual cash Present value Year Present Value flow Factors at 10% ? ? ? ? 0 (2,500,000) 1,000 (2,500,000) 1 500,000 0.909 454,500 2 600,000 0.826 495,600 3 700,000 0.751 525,700 4 750,000 0.683 512,250 5 750,000 0.621 465,750 2,453,800 NPV (46,200) Appendix 6 Part B –IRR Annual cash Present value Year Present Value flow Factors at 5% ? ? ? ? 0 (2,500,000) (2,500,000) 1 500,000 0.952 476,000 2 600,000 0.907 544,200 3 700,000 0.864 604,800 4 750,000 0.823 617,256 5 750,000 0.874 588,000 2,830,256 NPV 330,256 R=10% NPV=(46200) R=5% NPV=330256 IRR = (lower)% + (difference)% × NPV(higher)/NPV(higher) - NPV(lower) 330,256IRR=5%+×5%=9.39% 330,256,(46,200)