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AYR Co. is considering two separate projects known as 'Aspire' and 'Wolf' which are quite different but each of which has the potential to increase...
Total = $38m
Required:
Process a report to the Directors of AYR Co. which includes the following.
1. A calculation of the Net Present Value (NPV), Internal Rate of Return (IRR) and Payback Period for projects Aspire and Wolf. Detailed calculations should be included as an appendix to the report. All cash flows should be rounded to the nearest $.
2. Analysis and evaluation of the investment project options as follows:
i. A recommendation regarding which project (if any) to undertake;
ii. Justifications for your recommendation including an evaluation of the investment appraisal techniques used in task 1 above.
iii. A summary of other factors that should be considered and information that may be needed
3. A discussion of the two sources of finance being considered by the board of AYR Co. Your report should include:
i. A description of Equity and Debt.
ii. An explanation of the costs of each source of finance.
iii. An analysis of the effect the selection of the source of finance may have on AYR Co.'s weighted average cost of capital.
iv. An assessment of the impact of the selection of finance on current and potential shareholders and lenders. prior to making a final decision.
