H2O Innovations: Capital Investments
Choose and discuss two projects (one current, one long term) that require an investment for your firm, H20 Innovations. One should be a 'current project' and the other long-term investment project.
Explain what source of funds would be acceptable and explain your reasoning.
H2O Innovations Inc.
H20 Innovations Inc. (HI) design and manufactures custom high-performance water treatment solutions. In other words, in a world of shrinking clean water supplies, HI can recycle used water! Their expertise and market advantage is that they have a process and technology that is superior to the existing models. Their systems can process more water, with better results, in less time, using less space, with less on-going operating costs, and less risk of contamination.
The current project is to build a machine that will simulate high pressure sludge by pumping soot into water at high pressure, a "sludge simulator." This is not a machine that is available on the market so it is a self-constructed asset. The funding is for labor and materials. The machine is expected to take about 90 days to construct, mainly because many of the parts will have to be fabricated individually to fit with each other. This requires tooling one piece at a time and so turn-around is slow. For a short-term project like this, we want short-term financing. I would choose a six month revolving credit facility with ...
Your tutorial is 776 words and suggests two projects, a 90-day construction of test equipment and a new factory. The reasons for the financing chosen is explained along with the alternative.