There Are Many Different Factors That Can Cause Loneliness

There are many different factors that can cause loneliness and isolation in a person’s life. Many of these factors are present throughout Of Mice and Men. The environment and the people who surround that person can really impact the quality of life one lives. Although isolation occurs when a person separates themselves from others physically, a person can also be isolated inside their own minds, even with others around them. In John Steinbeck’s novel, Of Mice and Men, Symbolism, imagery, and tone are used to show how isolation and loneliness shapes the lives of several characters. Two migrant workers, by the names George Milton and Lennie Small, are making their way to a California farm where they are due to start working. George is a†¦show more content†¦They’s a pig pen†¦Ã¢â‚¬  (Steinbeck 57). Lennie always chimed in by saying â€Å"We could live offa the fatta the lan† (Steinbeck 57). This description of their â€Å"dream farm† att racts the interest of other characters, including Candy and Crook, who like Lennie and George, want to live a free life on a farm of their own. This farm becomes a symbol of the relationship between Lennie and George. It is a mutual interest that the two have this brings them closer together. The farm would allow Lennie to feel safe and would give him a purpose for caring for his animals. Retelling the description of the dream farm becomes a ritual. When Candy offers money to put towards the farm, the symbol becomes a strong reality. Candy states, â€Å" S’pose I went in with you guys. Tha’s three hundred an’ fifty bucks I’d put in† (Steinbeck 59). The â€Å"dream farm† represents freedom and protection from the rest of the world. Unfortunately, the dream of owning a farm doesn’t turn into reality. Soft object such as a woman’s dress, a furry mouse, and a soft puppy, all symbolized comfort and security to Lennie. Each of these different obsessions got Lennie into trouble. Lennie and George had to leave the town of Weed when he innocently touched a woman’s dress because it looked soft. A furry mouse was accidentally petted to death in Lennie’s pocket. His new soft puppy and Curley’s wife both had their necks broken because Lennie didn’t know his own strength when touching them. Lennie’s bigShow MoreRelatedDepression Can Mean Several Different Things. It Can Mean1398 Words   |  6 PagesDepression can mean several different things. It can mean normal depression, such as loss, conflict, trauma, or the disruption of normal life balance. It can be a symptom of a physical illness, or a side effect of medication. It can also be based on neurochemical abnormalities (Karren, Smith, Gordon, 2014, p. 181-182). Depression as an illness is not a normal reaction, but it can occur even without a clear reason (Karren, Smith, Gordon, 2014, p. 182). 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American Immigration Entropy The Land Of Opportunity And...

Cherub Ravoori. Eng 102- 050. Daniel Listoe. Draft 1, 10- x-15 â€Å"American Immigration Entropy† Stars and stripes, the land of opportunity and the nation of immigrants. The United States of America, one of the largest and most influential countries today, is and always has been a grand attraction to people all over the world. America has become home to people from all corners on this planet; especially to Europeans seeking wealth and religious freedom, to several African slaves brought to America against their will from the 17th to 19th centuries; and today to the major immigrant groups in America: Asians and Latin Americans. My family and I emigrated from Hyderabad, Pakistan to Milwaukee, Wisconsin, United States of America in 2014. We fortunately managed to receive our Green cards and Social Security after much toil and expense. It is a big question to me to and several Americans as to why people do not immigrate to America simply legally as we did and reside in America without worry. More than 12 million people in US aren’t fortunate as we were in successfully finding legal permanent residence (Immigration policy center). America’s Immigration System has several problems because of which several immigrants and the country itself is suffering. The American Immigration System has several problems and fails to meet the demands of today’s globalized society. The fault of the US government is not just its

The Co-Operative Bank IMC Free Essays

string(171) " key message the bank wants to convey to its target audience is that it is a values-driven bank that plays fair in a banking landscape that is thought of as the opposite\." Executive Summary The Co-operative Bank Is New Sealant’s only bank that Is owned by its customers. Formerly simply a Building Society, the bank Is now looking to grow its customer base as a fully registered bank through a variety of avenues Including appealing to the tertiary student market. This report focuses on the Integrated marketing communications needed for accurately targeting the tertiary market. We will write a custom essay sample on The Co-Operative Bank IMC or any similar topic only for you Order Now Firstly, It outlines a situation analysis including a PEST analysis, a competitor analysis, and the target market and the positioning of the Co-operative Bank with regards to its competitors. The communication strategy looks closely into the banks current communications offerings. This analysis focuses on how the companies message combines with its with the imagery used in its advertising. The media strategy outlines how the company has used awareness, universal and emotion strategies in its communications to target the tertiary market. Objectives are then outlined to provide scope for the banks future MIMIC activities. Finally, the report provides recommendations (Including personal selling, promotion and public relations) and improvements to help the bank reach Its objectives In the next 12 months. As technology is always changing it is important that banks are continuing to update and make changes to their digital platforms to continue to be competitive in the market. 1. 2. 4 Environment -Environmental factors do not have a massive impact over the Co-operative bank forever climate change have some effect on the success of New Zealand businesses abilities to save and service loans. Particularly as New Zealand is an agricultural based society and climate change disrupts farming processes. 2 Competitor Analysis In the tertiary banking sector there are 5 main players that the Bank must compete with. Each has their own drawer however the reality is the base package each bank offers is very similar and in terms of costs, the banks offer students free or relatively free banking – See Appendix 1. On top of this each bank differentiates itself by offering extra services that are enticing to the student lifestyle. 2. 1 ASP ASP, as well as a relatively free base package, offers students free fries at McDonald’s every time they use their card. This â€Å"gimmick† is attractive to students as it means offer students a large overdraft and a txt when funds are running low. 2. ANZA Ann.’s tertiary package is perhaps the least â€Å"gimmicky’ of the big banks. They offer accessible branches and Tam’s on campus as they are aware a student is often time poor. 2. 3 BENZ Ban’s Younger is known to be extremely innovative and in tune with a tertiary audience’s preference for good, simple web design. Their point of difference is an industry l eading web application that makes handling finances, something that student have great difficulty doing, every simple. 2. 4 Westward Wastepaper’s Student Pace, historically, has used gimmicks such as a free $25 upon sign up and a free pizza to engage the tertiary audience to bank with them. In the long term they also offer a â€Å"save and win† scheme that entices students to bank with them to win money on the money they choose to save. 2. 5 Kickback Kickback has perhaps the most comprehensive banking package. Their extra services include software to help manage your money, no commission currency conversion, free use of ANZA Tams on campus and free txt banking. This shows they are very much in tune with the requirements of being a student in New Zealand which supports Kickbacks main draw card of the bank being a New Zealand owned bank. 2. Co-operative Bank The Co-operative Banks student package is by contrast the least comprehensive. They offer a top interest rate of 5% however their main drawer, even for students, is still the fact that they are not Just New Zealand owned like Kickback but owned by the New Slanderer that bank with them. Growth and Maturity of the Industry New Zealand banks have enjoyed strong growth in lending since the 2008 global downturn. Pro fits however, are down due to â€Å"increasing regulatory pressures and strong competition in the lending market† (KEMP, 2013). Operational Revenue and Profitability At the end of 2013 financial year, the bank recorded profits before rebate at $mm (The Co-operative Bank, 2013). $1 m of this was distributed to customers. As at 31st December 2013 operating revenue reached $4. Mm (The Co-operative Bank, 2013). 5 Strategic Goals The Co-operative Bank has an overall strategic focus on â€Å"achieving long-term refillable growth, based on co-operative principles (The Co-operative Bank, 2013). 6 Target Marketing The Co-operative Bank targets those in the tertiary segment who are motivated by â€Å"good values†. These students, generally 18-25, will be those who are wary of the other big banks and the values they stand for. They will consist of students who are above the other banks â€Å"gimmicks† and would rather see their money buying some â€Å"goodness† rather than get free fries, for example, from a controversial multinational. They will have a solid â€Å"student† lifestyle with a low income, low outgoings and will nearly not have any dependents. 7 Market Positioning competitors try to outdo each other with clever marketing and competitive rates they are, compared to other industries, barely distinguishable from each other. As shown in Figure 1, the Co-operative Bank occupies a position that is relatively separated from its competitors in terms of perceived cost and on a values based analysis. Figure 1 – Positioning of New Zealand Banks This position clearly demonstrates to their target audience that they are set apart from their competitors as an alternative to banking in system where banks are driven y profits for their (often overseas) investors rather than by the values of and profits for their New Zealand owners/customers. Section 2 8 Communication Strategy Since the banks rebind in 2012 the bank has focused its communications on improving low awareness. It is spearheaded by the message â€Å"driven by your prosperity, not our profit†; this focus will help the bank achieve its goal to double its customers within 5 years (Stopper’s, 2014). The key message the bank wants to convey to its target audience is that it is a values-driven bank that plays fair in a banking landscape that is thought of as the opposite. You read "The Co-Operative Bank IMC" in category "Papers" They use a brand image strategy to convey that although they are able to take calculated risks for the benefit of their customer-owners, they want their audience to know they want their activities to be transparent and â€Å"above the line†. The main symbol used by the bank is the infinity sign that consists of the 2 g’s in Co-operative Bank, known as the â€Å"prosperity loop†- See figure 2. The loop is conveniently extracted from the banks name and symbolizes its goal of creating prosperity, not profit, between the bank and its customer-owners with the benefits flowing between the two entities. This symbol associates potential customers with the brand and its objectives of â€Å"being about mutual benefit and true sustainability. (The Co-operative Bank, 2014, p. 2) Figure 2- The Prosperity Loop The loop is replicated though all forms of media advertising further insisting to its customers an ongoing sense of mutuality and support. In print media, the loop headline type treatment overlays both the heads of customers or their children and links them to the banks message, connecting a potential customer’s emotion to the advertisement. The loop could so be seen to symbolism a thought bubble, further personifying the banks message. See figure 3 Figure 3- Print Advertisement This advertisement takes queues from thought leadership marketing as it shows a young, seemingly wealthy man thinking positively about the banks differentiation strategy. As this man represents a lifestyle students aspire to participate in and the target market can now link him to the Co-operative bank. In theory, students will be more likely to think positively about, and possibly Join the bank. This links back to the banks goal of doubling its customer base in five years and helps the bank on their way to achieve it. Another brand association used is the companies color palette. The palette is distinctively fresh and focuses on a bright green color – see figure 4. This associates the brand with being fresh and distinctive as well as with growth. Natural context. This is important to the brands image as it reflects on New Slanderer emotions as a â€Å"clean, green† nation and may help the target market to associate with the bank as an extension of their patriotism. Also the mix of the color green as a symbol of natural growth and money is a reflection of the banks views on sustainable banking. Further, it associates this idea to the Co-operative Banks brand ND reinforces to tertiary students that their principles will bring â€Å"growth† to their â€Å"money’ in a sustainable way. This is particularly relevant to the target market who currently have low incomes but potential to growth their worth in the next few years. For them it means the bank is on their side and wants to work with them to grow their money in a sustainable way. Figure 4- Color Palette 9 Media Strategy and Appropriation The company, carrying out its awareness strategy for growth, used a broad mix of media mediums including a focus on print but also consisting of a television spot, audio advertising, and limited social media (Backbone, Linked in and Youth) to target a wide range of possible customers (Stopper’s, 2014). The campaign is centered on presenting the banks differentiation from other banks as a New Zealand owned bank and the fact it is 100% owned by its customers. Although there was no media directly targeting tertiary students, the Co-operative Banks mix of mediums will have some effect on this target market. Using a universal strategy, as in this case, the bank reaches a large amount of potential customers. It also provides the bank with economies of scale. As a small bank, although not ideal, this strategy is relatively appropriate as, there is limited budget for large scale advertising. The bank has opted to pull resources together rather than loose budget to smaller and perhaps less successful strategies. This is at the cost of targeting specific demographics, such as the tertiary target market, with media strategies tailored to their particular motivations but allows the bank to target all New Slanderer who feel strongly about banking with a New Zealand bank that shares profits with its customers. The content of the advertising draws on emotional strategy and uses a lot of patriotic imagery ouch as beach scenes, trout fishing, and office and cafe culture. These are scenes of New Zealand culture that rouse patriotism in most New Slanderer and this helps the bank not only reach people who will be interested in how the bank functions due to their patriotism but inform others of the benefits of Joining the bank. This is appropriate for the bank as it is harnessing current events (such as the class action against fees and the 2008 global downturn that have caused a cultural shift in New Zealand society in that people are more skeptical of banks) and building on the emotions they feel . It is therefore prudent for the bank to target the majority of society as the majority of society will be motivated by this emotion to Join the bank. 10 Objectives 1. Increase top-of-mind awareness level of the Co-operative bank within the tertiary market by 50% within the next 12 months 2. Increase knowledge within the tertiary market about the benefit of â€Å"owning† the bank they are banking with by 50% within the Bank within the next 12 months. 1 Improvements The weakness of the Banks current MIMIC plan lies in the fact that it has not tailored the plan to target specific groups such as the tertiary market. This suggests that the relationship between The Co-operative Bank and its tertiary customers is not as connected as it could be. To improve this, the bank does not necessarily have to change its message because as outlined prior, the patriotic and anti-status quo message used by its current offering will appeal to this market and also make the most of the banks industr y-relative limited budget. The bank instead should work on making these messages more accessible to the tertiary market in order to improve the communication lines of the banks already strong message. Relationship Reach Include tertiary market specific imagery in print advertising There is a lack of tertiary specific imagery used by creative in the print media. There are a variety of children and young professionals and although some students may see these people as aspirations, they may also feel excluded and therefore disconnected from the banks message as the images are unrepeatable to them at their current age. Create an active twitter account that backs up the banks brand image but also feels like it is maintained by a tertiary student. It will post breaking banking news and intelligently debate key players in the banking industry. Create a presence on campus by locating brochures at campus student finance offices Make brochures available that provides step by step financial planning for students that is branded with Co-operative bank. The brochures will also provide information about the Co- operatives services. The content will be so effective that campus financial planners will recommend them to students. This will increase student’s knowledge about the bank. Change billboards near tertiary institutions to have very tertiary student age appropriate creative. Add a scene to the television spot that is directly relatable to by majority of tertiary students. The advert currently has scenes that will appeal to only a select part of the target market I. E office employees and trout fishers. Adding a tertiary related scene with strong tertiary markers will strengthen the banks relationship with students as they will feel included in their advertising. Promote banks message at campus fairs. Sponsor tertiary events 12 Promotional Mix Recommendations 12. 1 Public Relations and its community based values. Tertiary students will be selected to spend a day in the life of community organizations with a particular emphasis on organizations that purport the interests of tertiary aged students such as canteen and be followed by a documentary team.. The outcome will be a documentary series posted on Community Loop’s Youth. These videos will expect to be picked up by local media and be interesting enough for students to want to share on Youth. 12. 2 Personal Selling At campus events, the bank would loan its employees to event to handle the financial aspect of the event and at the same time inform students of the banks offerings- supporting and promoting the banks message that it works within the community in a positive way. For example, at the â€Å"Nun Games†, Co-operative Bank employees in â€Å"community loop† uniform will handle ticket processing at the gate and have the â€Å"community loop† marquee providing shelter for students. Employees will hold conversations with students about the banks offerings and message. Such a presence evokes brand awareness within in the student community and at the same time, shows off the banks tertiary product. 12. 3 Sales Promotion The bank stands out among other banks as it does not offer students â€Å"gimmicky’ promotions with its package – See appendix 1 . There is an opportunity here for the Ann. To offer a promotion to students that does not seem as lightweight and also gain attention of the students who are likely to switch to the bank because of its message. The promotion will support the banks community centered message and feature a system wherein if you sign up you get a free stationary pack (bio-degradable and from sustainable sources) and a child from a low decide school in the local area also gets a pack. The stationary will feature the banks â€Å"Community Loop† logo. 13 Budget 13. 1 Objective-and-Task Method The bank would use an objective and task method to specify the role advertising will lay for the Co-operative brand and, the budget has been set accordingly. This method has been chosen as it allows the bank to focus on the objectives based on the needs of the bank and therefore reinforce the banks strategy rather than the needs of other factors such as what competitors are doing or how much they can afford. How to cite The Co-Operative Bank IMC, Papers

New Sources of Development Finance Jackson Plc

Question: Describe and analyse the performance of the company Jackson Plc based on the financial statements for the year FY2014 and FY2015 using ratio analysis as a key enabling tool. The analysis of the various ratios is being carried out to comment on the performance of the company during the given period. Answer: Profitability Ratios The relevant profitability ratios for the company are shown in the tabular format below. Ratio Formula FY2014 FY2015 Gross profit margin Gross Profit/ Revenue 45.25% 41.71% Net profit margin Net Profit/ Revenue 12.85% 5.09% Return on Assets Net Profit/ Total Assets 17.56% 6.56% Return on Equity Net Profit/ Total Equity 24.27% 10.79% It is apparent from the ratios above that the profitability of the company has severely declined in the year FY2015 as compared to the previous year i.e. FY2014. The drop in profits is more dramatic at the net level than at the gross level. At the gross profit level, the sharp rise in manufacturing costs is responsible for the margin decline. The administrative expenses have almost become twice in FY2015 even though the increase in revenue is only around 15%. Further, the selling expenses have also increased by a much greater proportion as a result of which the net profit margins have plummeted. Another contributory factor in this regard is the increase in interest expense in FY2015 which has surged by more than 50% due to the increase in the debt on the books. The decline in ROA and ROE are mainly attributed to the fall in the net profits which has decreased by more than 50% in FY2015 (Damodaran, 2015). Liquidity Ratios The relevant liquidity ratios for the company are shown in the tabular format below. Ratio Formula FY2014 FY2015 Current Ratio Current Assets/ Current Liabilities 2.63 1.62 Quick Ratio (Current Asset - Inventories)/ Current Liabilities 1.56 0.85 On the liquidity front, there has been a marked decline in FY2015 as compared to FY2014. The decline in the current ratio at the end of FY2015 can be explained on the basis of the bank overdraft facility which was availed in FY2015 to the tune of 1.13 million which led to a surge in the current liabilities. The decline in the quick ratio at the end of FY2015 can also be explained on the back of rise in current liabilities owing to bank overdraft. However, the liquidity position of the company in the short term still remains robust (Brealey, Myers Allen, 2008). Gearing Ratios The relevant gearing ratios for the company are shown in the tabular format below. Ratio Formula FY2014 FY2015 Debt to equity ratio (Short term + long term debt)/ Total equity 0.22 0.53 Interest Coverage Ratio Operating Profit/ Interest Expense 3.79 1.94 Long term debt to equity ratio Long term debt/Total equity 0.22 0.39 The gearing ratios for the company have progressively worsened in FY2015 which may be explained on the basis of the account of increase in both short term and long term debt while the equity component has only marginally increased on account of retained earnings. On account of the debt, the interest expense has surged by over 50% in FY2015 which is responsible for the decline in the interest coverage ratio. Despite the increase in the debt component, the gearing ratios continue to remain healthy and if these debts levels could be sustained, the company should be able to avoid any liquidity issues going forward (Johnson, 2009). Asset Utilisation Ratios The relevant asset utilisation ratios for the company are shown in the tabular format below. Ratio Formula FY2014 FY2015 Asset Turnover Sales/Total Assets 1.37 1.29 Inventory Turnover Cost of goods sold/Inventory 5.90 6.23 Receivables Turnover Sales/Accounts Receivables 11.42 9.60 Payables Turnover Cost of goods sold/Accounts Payable 8.78 15.15 The asset turnover ratio has declined in FY2015 which indicate towards lesser efficiency of usage of assets to generate sales. This is primarily due to lower proportionate increase in the sales as compared to the total assets. The inventory turnover has improved which is positive for the company as it indicates improvement in demand for the companys products. The receivables turnover has declined in FY2015 which indicates that higher time is taken to convert the sales into cash which may cause liquidity issues going forward. The payables turnover has increased in FY2015 which indicates a lower credit period to the company from suppliers (Parrino Kidwell, 2011). Investor Potential Ratios The relevant investor potential ratios for the company are shown in the tabular format below. Ratio Formula FY2014 FY2015 Earnings per share Net profit/Number of shares outstanding 0.38 0.18 Dividends per share (Pence) Total dividends/Number of shares outstanding 18.71 9.36 From the above calculation, it is apparent that there is a decline in the EPS and the per share dividend which is attributed to the decline in the net profits. Conclusion On the basis of the above calculations, it may be inferred that the companys performance in FY2015 is significantly inferior as compared to the corresponding performance in FY2014. This is apparent from the decline in profitability and increase in the debt levels which in general has resulted in liquidity crisis. Inventory days (2014) = 365/5.90 = 61.88 days Inventory days (2015) = 365/6.23 = 58.58 days Receivable days (2014) = 365/11.42 = 31.96 days Receivable days (2015) = 365/9.60 = 38.03 days Payable days (2014) = 365/8.78 = 41.57 days Payable days (2015) = 365/15.15 = 24.09 days Working capital cycle (2014) = 61.88 + 31.96 41.57 = 52 days Working capital cycle (2015) = 58.58 + 38.03 24.09 = 73 days From the above calculation, it may be inferred that the liquidity position of the company has worsened in FY2015 since the working capital cycle has increased to 73 days from 52 days in FY2014. There are certain limitations with regards to usage of ratio analysis. The ratio analysis is based on historical financial performance which may be indicative of the future performance of the company. Hence, making decisions with regards to firms based on the time series historical performance may not be appropriate. Additionally, the firms may enter into new customer segments which may fundamentally alter the key ratios that may not be highlighted by the ratio analysis (Palmer, 2006). In cross sectional comparison, the firms ratios are compared with that of the industry which may not be accurate since the various individual firms that constitute the industry may be operating in different markets and hence the comparison of ratio is not advisable since conclusions drawn would not be reliable (Damodaran, 2008). Part B In order to ascertain the economic feasibility of the given project using various appraisal techniques, it is critical to ascertain the incremental cash flows associated with the project on a yearly basis which is summarised in the table shown below. YEAR Particulars 0 1 2 3 4 5 6 Cash inflow from sale of products 1120000 1120000 1120000 1120000 1120000 1120000 (-) cash outflow due to expenses 275000 275000 275000 275000 275000 275000 (-) Depreciation expense 474583.3 474583.3 474583.3 474583.3 474583.3 474583.3 (-) Cash outflow initial outlay 3350000 Pre-tax cash inflow/(outflow) -3350000 370416.7 370416.7 370416.7 370416.7 370416.7 370416.7 Tax (@ 30%) 0 111125 111125 111125 111125 111125 111125 Post tax cash inflow/(Outflow) -3350000 259291.7 259291.7 259291.7 259291.7 259291.7 259291.7 (+) Salvage value cash inflow 502500 (+) Depreciation Expense 0 474583.3 474583.3 474583.3 474583.3 474583.3 474583.3 Net post tax cash inflow/(outflow) -3,350,000 733,875 733,875 733,875 733,875 733,875 1,236,375 It is imperative to note that since the tax rate information has not been provided for the given question, it has been assumed at 30%. On the basis of the above shown incremental cash flows, the various investment appraisal techniques would be applied in the manner shown below. Payback Period Initial investment = 3,350,000 Cash inflows during the first four years = 733875*4 = 2,935,500 Remaining investment to be still recovered = 3350000 2935500 = 414,500 Time required from the 5th year to recover the above = 414500/733875 = 0.56 Hence, payback period = 4.56 years Accounting rate of return It is evident from the table shown above that the average accounting profit for the company post tax is 259,291.7. Average investment = 0.5*(Investment Salvage value) = 0.5*(3350000 502500) = 1,423,750 Hence, the ARR = (259,291.7/1423750)*100 = 18.21% The NPV for the project has been estimated in the tabular format below taking the cost of capital as 7% pa. YEAR Particulars 0 1 2 3 4 5 6 Cash inflow from sale of products 1120000 1120000 1120000 1120000 1120000 1120000 (-) cash outflow due to expenses 275000 275000 275000 275000 275000 275000 (-) Depreciation expense 474583.3 474583.3 474583.3 474583.3 474583.3 474583.3 (-) Cash outflow initial outlay 3350000 Pre-tax cash inflow/(outflow) -3350000 370416.7 370416.7 370416.7 370416.7 370416.7 370416.7 Tax (@ 30%) 0 111125 111125 111125 111125 111125 111125 Post tax cash inflow/(Outflow) -3350000 259291.7 259291.7 259291.7 259291.7 259291.7 259291.7 (+) Salvage value cash inflow 502500 (+) Depreciation Expense 0 474583.3 474583.3 474583.3 474583.3 474583.3 474583.3 Net post tax cash inflow/(outflow) -3350000 733875 733875 733875 733875 733875 1236375 PV of cash inflow/(outflow) @(7%) -3350000 685864.5 640994.8 599060.6 559869.7 523242.7 823848.9 NPV () 482,881.26 Hence, the NPV of the project is 482,881.26. IRR or Internal Rate of Return The IRR for the project is estimated for the project as shown in the table below. YEAR Particulars 0 1 2 3 4 5 6 Cash inflow from sale of products 1120000 1120000 1120000 1120000 1120000 1120000 (-) cash outflow due to expenses 275000 275000 275000 275000 275000 275000 (-) Depreciation expense 474583.3 474583.3 474583.3 474583.3 474583.3 474583.3 (-) Cash outflow initial outlay 3350000 Pre-tax cash inflow/(outflow) -3350000 370416.7 370416.7 370416.7 370416.7 370416.7 370416.7 Tax (@ 30%) 0 111125 111125 111125 111125 111125 111125 Post tax cash inflow/(Outflow) -3350000 259291.7 259291.7 259291.7 259291.7 259291.7 259291.7 (+) Salvage value cash inflow 502500 (+) Depreciation Expense 0 474583.3 474583.3 474583.3 474583.3 474583.3 474583.3 Net post tax cash inflow/(outflow) -3350000 733875 733875 733875 733875 733875 1236375 PV of cash inflow/(outflow) -3350000 659806.7 593213.9 533342.2 479513.2 431117 653007.1 NPV 0.00 The discount rate used for the above computation is 11.22% which is the IRR. Discounted payback It is computed by taking into consideration the discounted incremental post tax cash flows assuming the cost of capital for the company to be 7%. Initial investment = 3,350,000 Discounted Cash inflows during the first four years = 685864.5 + 640994.8 + 599060.6 + 559869.7 + 523242.7 = 3,009,032.4 Remaining investment to be still recovered = 3,350,000 3,009,032.4 = 340,967.6 Time required from the 6th year to recover the above = 340967.6/823848.9 = 0.41 Hence, discounted payback period = 5.41 years Recommendation On the basis of the above investment appraisal techniques, it may be concluded that the machine should be bought and project should be pursued because of the following reasons (Petty et. al., 2015). The NPV of the project is greater than zero and hence the project is value accretive for the companys shareholders. The IRR of the project is greater than the cost of capital which stands at 7% for the given project. The payback period along with the discounted version both stand at values which are lesser than the project life. The critical appraisal of the various investment evaluation techniques presented above is carried out below. Payback Period Benefits It is easy and convenient to use since the calculations are minimised. It is not sensitive to any changes in the discount factor. Limitations The time of money is not considered in this metric. All cash flows occurring beyond the payback period are not reflected in the calculations. Due to the above limitations, the usage of payback period as a primary evaluation metric is rare. However, it is often deployed along with other superior metrics for determining the commercial viability of the projects (Bodie Merton, 2011). Accounting Rate of Return (ARR) Benefits It is easy and convenient to use since the complexity and underlying calculations are less It takes into consideration the underlying profitability of the project. Limitations The time of money is not considered in this metric. Consistency is an issue since its calculation varies widely due to which comparison becomes unreliable. The method is not based on cash flow information but is rather based on accounting income which limits its usage. Owing to the various limitations, ARR is almost never used as a standalone metric to analyse project feasibility. Its usage as a complementary metric of evaluation is rather limited due to the above issues that have been identified (Fridson Alvarez, 2007). NPV (Net Present Value) Benefits It is a reliable evaluation technique and can be deployed even when there are multiple outflows. It takes into consideration the cash flow over the whole life of the project and also considers the time value of money. Limitations It is comparatively complicated as compared to the other techniques with regards to calculation and overall complexity. It is particularly sensitive to the cost of capital or discount factor. NPV is without doubt the most widely used evaluation technique in capital budgeting due to its benefits. Further, with the advent of computers, calculations over long horizon are also simple to achieve. Also, with the aid of technology the prediction with regards to discount factor is becoming more accurate and dynamic to adjust with the changing times (Groppelli Nikbakht, 2011). IRR or Internal Rate of Return Benefits It takes into consideration incremental cash flows over the entire project life along with underlying time value. It is independent of the discount factor deployed though final decision is derived from the same. Limitations It is not reliable in cases when there are net cash outflows during the project. It is comparatively complex as compared to the other simpler techniques. Despite its limitations, IRR has wide acceptability in the industry and is used along with the NPV. In projects, where there is no net cash outflow during subsequent years besides at the beginning, IRR is a reliable metric (Jarrow, Maksimovic Ziemba, 2011). Discounted Payback Period Benefits It takes into consideration time value of money. It is a simple metric to compute compared to NPV and IRR. Limitations It does not consider the cash flows beyond the discounted payback period. Discounted payback period is a comparatively superior method compared to payback period since it considers the time value of money and hence is used as a complementary metric to NPV and IRR (Damodaran, 2008). Part C Internal Financing Means One source of internal finance that can be used for raising finance is in the form of equity from the promoters. This means of financing has certain benefits but also has some limitations. One potential benefit of promoter financing is that there is no equity dilution or loss of control which is pivotal for making crucial strategic decisions. Besides, this is a quick means of financing since it does not involve the usual legal and operational hassles which are involved in raising equity finance from capital markets. Additionally, from a company perspective there are no interest or repayment obligations which also eliminate bankruptcy risk and associated costs (Atrill McLaney, 2014). Despite the benefits, there are certain limitations of using promoter equity as a financing means. This is primarily because promoter may have only limited resources and hence the scope of this financing would be limited only. Further, considering the high risk involved in equity investing, the promoter may not be interested in putting high amount of equity as this may yield to huge losses. Besides, relying too much on promoter equity would cause concentration of ownership which may not be in the best interest of the company as diversity in ownership groups is preferable (Brigham Ehrhardt, 2013). External Financing Means One potent means of external financing is the issue of bank loan. It is a common means of external financing which is readily deployed. One of the benefits associated with availing a bank loan is non-dilution of equity and hence being able to retain control over the organisation along with key decision making. Besides, the bank loan is associated with interest payments which lower the tax liability of the company (Atrill McLaney, 2014). However there are certain limitations with regards to raising finance through bank loan. Since the loan needs to be repaid through monthly instalments along with the interest payment, there are significant liquidity risks and associated bankruptcy costs. Additionally, the banks typically impose various debt covenants that tend to limit the flexibility available to business. Besides, the interest payments owing to debt would tend to erode the business profitability and hence debt could be raised in moderation only (Brealey, Myers Allen, 2008). Break even analysis is an evaluation tool which is often applied in the organisation so as to aid decision making particularly with regards to price. However, the usage of break-even analysis is essentially based on a plethora of assumptions which are critically analysed below. The break even analysis is based on the core assumption that the various costs and expenses can be divided into two segregated compartments i.e. fixed costs and variable costs. However, this is not true for all costs since some of them may be mixed costs which have both fixed component and variable costs. Such sticky costs may put into question the decision reached by break even analysis model. An example of such costs could be electricity costs which to some extent would be fixed but also has a variable component and hence suitable changes need to be made (Parrino Kidwell, 2011). Further, the fixed costs are assumed to be constant irrespective of the activity level which may not be true especially beyond a certain specified activity level when even fixed costs would escalate. Usually this is not taken into consideration which adversely impacts the applicability of this technique. However, considerations may be made for this based on input from management (Damodaran, 2008). Also, it is assumed that variable cost varies in direct proportion with the activity level. However, this may not be true as due to economies of scale or diseconomies of scale, the per unit variable cost may decrease or increase respectively. This has assumed particular significance in the globalised world where production levels have become increasingly higher and hence the variable costs do not remain constant (Groppelli Nikbakht, 2011). The product and sales mix is assumed to be constant for break-even analysis which is not true especially in a globalised world which is hyper competitive. As a result, the sales mix is highly dynamic based upon the underlying market dynamics and thus rendering break even model with limited utility (Fridson Alvarez, 2007). An additional assumption is that the market conditions would remain constant which is not obeyed especially in the global markets where any happening in one part of the globe tends to have global impact of varying degree. Also, the consumer base of the multinational companies is increasingly becoming global due to which there are frequent variation in prices and cost (Petty et. al., 2015). From the above, it may be inferred that in the globalised world, the utility of the break even model has been put to question, however some of the above limitations can be dealt with by making the model more dynamic while maintaining the core model intact. Hence, the users of the model should made necessary changes to account for the various dynamic changes so that its utility remains intact going ahead. References Atkinson, A 2005, New sources of development finance, 3rd ed., Oxford University Press, Oxford Atrill, P McLaney, E 2014, Accounting and Finance for Non-Specialists, 9th ed., Trans-Atlantic Publications, Philadelphia, USA Bodie, Z Merton, R 2011, Finance. 3rd ed., Prentice Hall, Upper Saddle River, NJ Brealey, R, Myers, S Allen, F 2008, Principles of Corporate Finance, 9th ed., McGraw Hill Publications, New YorkBrigham, E F Ehrhardt, MC 2013. 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