Use the capital budgeting technique to justify India's alternate investment decisions.
Also, support your choice of the discount rate used in the calculation of of NPV...
Financial Plan of Moon Mobile Handsets
Our organization is manufacturing Moon mobile handsets and we are going to launch it into India. Sound Planning is the first step of the success of the business. It will act as a guidance and road map for the organization.
"A business plan is a summary of how a business owner, manager, or entrepreneur intends to organize an entrepreneurial endeavor and implement activities necessary and sufficient for the venture to succeed. It is a written explanation of the company's business model."
Business plan will include Road map of the following:
? Determine where the company needs to go
? Forewarn of possible roadblocks along the way
? Formulate responses to contingencies
? Keep the business on track to reach its planned goals
? Include functional plans or sub plans
Financial plan, budgeting and forecasting is one of the important components of the business plan and success of the business. This consists of details of raising and allocation of financial resources in an efficient and effective manner. Our plan will include cost structure, NPV and sensitivity analysis.
Investments and Cost structure
The investment decisions of a firm are generally known as the capital budgeting, or capital expenditure decisions. The firm's investment decisions would generally include expansion, acquisition, modernization and replacement of the long-term assets. Sale of a division or business (divestment) is also as an investment decision.
Thus this decision regarding the launch of new intelligent remote device is a capital budgeting decision. The techniques which can be used for evaluating the project are the Net present Value (NPV), and Internal Rate of Return (IRR).
This is a capital budgeting project because it has following characteristics:
? The exchange of current funds for future benefits.
? The funds are invested in long-term assets.
? The future benefits will ...
The solution uses capital budgeting techniques to justify India's alternate investment decisions.