Overview Internal Rate Of Return Finance Essay - Free Essay Example

Sample details Pages: 3 Words: 1007 Downloads: 6 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Assumes that the project will generate future cash flow which is reinvested at IRR. If a project generates low IRR, then it will assume reinvestment at low rate of return and on the other hand if the other project has very high IRR, it will assume reinvestment rate at very high rate of return. But this is not a realistic situation. Don’t waste time! Our writers will create an original "Overview Internal Rate Of Return Finance Essay" essay for you Create order As at the time the cash flows are generated, will have same investment opportunities is very difficult. In case of certain projects, a manager may require to invest into certain contingent projects also. So, IRR ignore these additional costs. IRR may suggest to purchase a asset but the benefits derived from that project may be wiped off by the cost of the contingent project. In case of mutually exclusive projects, that is the manager if selects then he has to reject other projects. In such a case IRR is not suitable as it gives a percentage of interpretation value which is not sufficient. It does not take into consideration the duration of a project in case two projects are evaluated with different time period. Other competitive methods Pay Back Period (Investment appraisal techniques, The Institute of Chartered Accounts England and Wales) Refers to time required for cash generated from a project to become equal to the initial cash outflows. This method is an initial screening method where by a manager can determine the initial time period by which projects return would equate the cost invested in a project. Hence, it would reject a project whose payback period is more than the targeted payback period. This method is very simple to use. It enhances the liquidity by focussing on early pay back. This method is alone is not suitable to determine the real worth of a project as it has several disadvantages: Ignores the timing of cash flows with the payback period. Ignores the cash flows after the end of an project as well as the total return of a project Also ignores the time value of money. In case two projects has similar payback period then it is difficult to determine which method is suitable. It could also lead to excessive investment in short run. It takes into account the risk of the timing of cash flows but does not take account of the variability of the cash flows. Accounting Rate of Return (Investment appraisal techniques, The Institute of Chartered Accounts England and Wales) ARR is defined as the average accounting period as a percentage of the accounting outlay. Higher the ARR better it will be. In order to select a project, ARR should be above the minimum acceptable level. The main advantage of the project is that it is very simple to calculate and understand. But it has several disadvantages: It does not take into consideration the timing of the project. It is subject to various accounting policies as it is based on accounting profits rather than cash flows. It ignores the time value of money. It does not take into account the size of an investment as it is a relative measure rather than absolute measure. Net Present Value (The Institute of Chartered Accounts England and Wales, 2009) NPV is the difference between present value of future cash flow of an investment and the amount of an investment. Discounted cash flow (DCF) techniques discount all the forecast cash flows of a capital investment project to determine their present value. The main advantage of this methodology is that it takes into consideration the time value of money. If NPV is positive, it indicates cash inflows from a project will generate a return more than the cost of capital hence the project shall be undertaken. If NPV is negative then it indicates that the inflows from a project would generate a return lower than the cost of capital, hence the project shall not be undertaken. If NPV is zero then it indicates that the cash inflows from a project would generate return same as the cost of investment, hence the project should not undertaken as it would have certain inherent risk and will not generate any wealth to the shareholder. (Dorfman, 1981 ) Disadvantages: The project size could not be measured or is not reflected. It is difficult to compute. It is difficult to compute appropriate discount rate. It may not give appropriate result when projects have unequal span of life. Time Value of Money Time Value of Money (TVM) is based on the principle that money today is worth more than money in the future because money today can be invested to earn a positive rate of return, producing more money tomorrow. It is an important concept in financial management and can be used to compare investment alternatives. The drivers of time value of money are inflation, consumer preferences and risk. The concept has an impact on the appraisal of long term projects. So, the future cash flows are discounted to reflect the time value of money. The total of these discounted cash flows reflect the true value of a project. Disadvantages This method requires an estimate of the cost of capital to decide a project. In case of mutually exclusive projects, the method does not give value maximizing decision. In case of capital rationing it does not give value maximizing decision. This method cannot be used in situation where the sign of cash flow during a project more than once during the life of a project. Conclusion IRR is an appropriate method to select a project as it considers the time value of money. As in todayacirc;â‚ ¬Ã¢â€ž ¢s world of competition, inflation plays a very significant role which decreases the value of money over a period of time. So, by considering these factors it becomes one of the methods while evaluating a project. Recommendations Each method has its own advantages and disadvantages so a manager should be very careful while selecting an appropriate methodology. If a manager chooses a wrong methodology then he would end up selecting a wrong project and can incur heavy losses.

1.07 Ethics Essay - 956 Words

1.07 Ethics Directions: Complete the tasks below. Replace the highlighted text with your own answers. Copy and paste your answers to the student comments box in 1.07 and submit for grading. For each of the following four cases, explain why you would either approve or disapprove the proposed research experiments. Evaluate each proposal based on the four main principles of ethical research provided in this lesson. Every research experiment must follow all four principles to be considered ethical. Copy and paste your answer only for each case to the student comments section of 1.07 and submit for grading. It is not enough to just approve or deny, you must also Case 1: The Psychology Department is requesting permission from your†¦show more content†¦There is most likely a virtual lab where they can experience the effects of brain legions. Case 2: Your University includes a college of veterinary medicine. In the past, the students practiced surgical techniques on dogs acquired from a local animal shelter. There have been some objections to this practice and the veterinary school wants the approval of your committee to continue this practice. They make the following points: 1. Almost all of the animals will eventually be killed at the animal shelter. It is wasteful of life to breed animals for the vet school when there is an ample supply of animals that will be euthanized anyway. 2. It costs at least 10 times as much to breed animals for research purposes. 3. Research with dogs from animal shelters and the practice surgeries will, in the long run, aid the lives of animals by training veterinarians. A local group of animal welfare activists demanded that you deny the schools request. They argue that the majority of these animals are lost or stolen pets and it is tragic to think that previously loved dogs could end up on a surgical table for an experiment. Furthermore, they claim that as people become aware that animals taken to shelters may end up in research laboratories, they will stop using the shelters and simply set these animals free. 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Ensure Team Effectiveness Project Free Essays

Momi jeweler| Sandeep kaur std01943| Aitt college| | Table of Contents 1 Name of the organisation2 2 Your position2 3 Type of position:2 4 Organisation background:2 5 Your role:2 6 Action plan:-2 7 Outcomes3 8 Alternative process3 8 IMPLEMENTATION4 10 Budget allocation4 11 conclusion4 1 Name of the organisation: momi jewellery shop 2 Your position:- Team leader of distribution and warehousing. 3 Type of position: – frontline management position. Reason for your new position developed: – there are many reason for develop team leader of distribution and warehousing position. We will write a custom essay sample on Ensure Team Effectiveness Project or any similar topic only for you Order Now The one reason is that nobody there to work for this situation, to achieve their goals, completes the organisation’s expectations. Work for company profit and production and provide good service to people so that every person can do their work with responsibility. 4 Organisation background:- it is a large jeweller firm. The organisation manufactures, imports and repairs jewellery for distribution to its many stores in all states. There are 12 team members, from different background and with differing levels of expertise. Some team members have worked with the organisation and in this vision, for members of years. Other team members are relatively new, while some have worked in other department/ sections of the organisation before being transferred to your division. 5 Your role: – your initial role, therefore, is that of trouble shooter, problem solver and team facilitator. You need to bring this group of people together to form a cohesive, effective and productive team. 6 Action plan:- action plan are very necessary to get a team goals and their expectation ,This Action Plan builds upon the Strategic Framework developed as a, result of an extensive research programme with businesses in the Jewellery shop, 2 The purpose of the research was to produce evidence to inform the development of a Strategy and Action Plan to support businessgrowth and development in the sector. While the focus wastherefore on factors affecting economic development, the researchcovered broader aspects relating to sustai nability, i. . environmentaland social factors. As a result a number of indirect factors have beenidentified and these have been taken into account in formulating boththe Strategy and Action Plan. 3The Actions have short medium and long lead delivery times. Each Action has been developed as aPracticalactivity, although some may be considered to be preparationfor future delivery. Where possible they build upon broaderinterventions already on offer to the business community from arange of stakeholders and providers. Apprenticeship orImproversNetwork:-Identify those companies that would support andshare the cost of developing a network which enableda small number of apprenticeships to be awardedeach year and provided work placements forimprovers. Starters fund Establish small grants schemes to supportbusiness start-ups with access to equipmentand purchase of tools. 7 Outcomes 1 Improved understandingand focus on trainingavailable and successionplanning. 2 Raised awareness of thesector 3More new product andimprove turnaround times (reference=http://www. jewelleryquarter. net/wp-content/uploads/2009/10/jibss_action_plan24909. df) 8 Alternative process If these process will not working then we have to use alternative process so the person can perform well like forming, storming, norming and performing these are the necessary stages for team development. So there must be training process so the employ can learn properly and perform properly 8 IMPLEMENTATION The following section sets out some proposals for the adoption andimplementation of the Action Plan. Action 1: An early activity should be to gain formal recognition for the Plan from Jewellers Association Company as principal funders of itsdevelopment. The achievement of this recognition should be led bysupport of the Steering Group and the nominated Business Champion. Action plan 2 should bring together appropriate representativesfrom those agencies identified in the Plan to confirm their support and to identify/confirm the lead organisation for each activity. This group,or some form of it, should agree to develop a formal remit and to actas a project management group for implementation. Action plan 3 An assessment of the resourcing implications ofimplementation and delivery. This should include identifyingfunding to enable the employment of a co-ordinator. 10 Budget allocation Action | Budget / Expenses ($)| 01| 5000| 02| 2750| 03| 3600| 04| 8900| 11 conclusion In the end we can say that in this large jewellery shop which is working for manufactures, import and repairs jewellery and it has many store in all states. I just have appointed there for team leader as a frontline management position so I can work for complete its expectation and goals. there were lack communication so I made some of action plan which will good shop and it will increase its productivity. 12 reference Books and website:- (http://www. jewelleryquarter. net/wp-content/uploads/2009/10/jibss_action_plan24909. pdf) How to cite Ensure Team Effectiveness Project, Essay examples