介绍组员, 我们的目的是给公司的两个方案做投资评估（project appraisal）
For Lochside Liquors Limited, manufacturer of a premium Scotch whisky, there are two projects to invest, namely rye whisky project and the project of expanding Highland Princess to the Asian and Far Eastern together with the liqueur project under the capital constraint of £400,000. As appointed to the financial consultants, we should make good decision for shareholders to gain more profits in long run. To measure the future investment performance we should consider the cash flow resulting from the actions.
2. Investment appraisal methods: NPV, IRR, PI AND PB 作为公司的投资者， 我们应该更关注于资本的投资， 也就是说在这里我们要将我们的资金在长远上应用好这些方法, 再介绍相关的两小点： 1. Cash fow matters more than profit 2. Timing of cash fows: incremental analysis The investment decision is the decision to commit the firms’ financial and other resources to a particular course of action. It is helpful for us to concentrate here on strategic capital projects concentrates on the allocation of a firm’s long-term capital resource. 1, Cash flow analysis considers all the cash flows and outflows resulting from the investment decision. 2, the decision-maker must assess how the business changes as a direct result of selecting the project.
3.Background: 在做cash flow 我们应该先注意几点capital expenditure, rate of inflation, age. 1, capital expenditure: equipment, renovation, and working capital 2, rate of inflation: Inflation refers to conditions in the notes in circulation, the purchasing power of reality larger than the output to supply, therefore it appears devaluation and the prices of goods continue increasing in the period of time. Inflation has a great impact in cash flow, and it relates to revenue and cost, hence it cannot be ignored. When we calculate the cost and revenue in the cash flow, inflation should be taken into the account. 3, age: 5
4. Factors in the cash flow: 介绍cash flow中的小点 和 原因 sales revenue, Operating cost Loss of lease, Contribution lost, Extra sales promotion costs, Capital allowance, taxation In financial management, as with all areas of management, an effective manager needs to identify the right information for decision-making. In identifying and analyzing information, manager should remember that effective information should be relevant, reliable and accurate. 5. Discounting the cash flow: 介绍下Discounting cash flow, cost of capital，WACC这个方法。 Money received in the future is usually worth less than today because it could be invested to earn interest over this period. We can use the discounted cash flow analysis to analyse the two projects by discounting cash flows to present value.
Cost of capital is the required rate of return on the various types of financing. The overall cost of capital is a weighted average of the individual required rates of return. There are two kind of financing way for this company, namely issuing shares of 715 pence share price and bonds of 13% discount rate. this cost of equity, which is 15.97%. Finally, Rick also told us that the risks of the two investments are the same, so the WACC as the cost of capital can be used as the acceptance criterion for both of subjects.
6.Irrelevance information: There are many expenses which are appeared