Strategic Management and Finance - Research Paper Example

1,670,000 Net cash flow per year 690,000 610,000 1,350,000 1,505,000 1,670,000 Net Present Value:Present Cash FlowsPV FactorsValue Year 1 690,000 0.8929 616,071 Year 2 610,000 0.7972 486,288 Year 3 1,350,000 0.7118 960,903 Year 4 1,505,000 0.6355 956,455 Year 51,670,000 0.5674 947,603 Salvage return700,000 0.5674 397,199 Total 4,364,519 Investment (10,000,000)Net Present Value (5,635,481)Payback Period:NetRemaining Cash FlowInvestmentPayback period is Longer than the project life of 5 yearsInvestment 10,000,000 Year 1 690,000 9,310,000 Year 2 610,000 8,700,000 Year 3 1,350,000 7,350,000 Year 4 1,505,000 5,845,000 Year 5 2,370,000 3,475,000 Scheme 2Net Cash Flow per YearYear 1Year 2Year 3Year 4Year 5Year 6Expected annual cash receipts from sales 2,600,000 2,800,000 3,000,000 3,200,000 3,500,000 3,500,000 Expected annual costs of new product Cash expenses 1,550,000 1,620,000 1,720,000 1,810,000 1,930,000 2,060,000 Depreciation expense 583,333 583,333 583,333 583,333 583,333 583,333 Net income 466,667 596,667 696,667 806,667 986,667 856,667 Net cash flow per year 466,667.

The reduction in the inventory turnover resulted from the significant increase in the stocks. This increase might be a result of the company's hedging for foreseen price increases. The Board should accept Scheme 2. Based on NPV, it has a much lower negative NPV than Scheme 1. Moreover, it has a shorter payback period than Scheme 2, which according to the above calculations will never be able to pay back the company's 10,000,000 investment. PT Trada Maritimes debuted in the Indonesia Stock Exchange on September 2, 2008 (Trada Maritime 2008).

Right after its debut, the stock price reached as high as 27 per cent of its IPO price. The company went public as a result of its additional capital requirements on its expansion plan for 2009. Trada Maritimes plans to spend as much as $315 million to purchase additional vessels over the next five years (Trada Maritime 2008). Globus Maritime Limited received the International IPO of the Year on February 1, 2008 at the Quoted Company Awards (Reuters 2008). Globus was first listed in the London Stock Exchange under its AIM index in June 2007 at an IPO price of 300 pence (www.

timagenislaw.com; www.investegate.co.uk). Right after its debut, the price of the company's stock skyrocketed as show in the graph below. Reuters 2008, 'Globus Maritime Limited Receives the 'International IPO of the Year' at the Quoted', Reuters, [Online] Retr