BUS1AFB Accounting And Finance For Business Individual Assignment

Question 3 (8 marks)

Your business is considering installing solar panels to reduce the electricity account and to be more environmentally conscious. You have determined a system that generates 30KW per hour is appropriate however, you are not sure whether to go ahead. You have obtained a number of quotes which you have narrowed down to Company A or Company B. Each solar company has provided you with the following 20 year financial summary data:

Required (approximately 700 words):

a) Explain each method listed above.
b) Determine and list the decision rule that applies for each method (you need to decide a reasonable number) and include one advantage and one disadvantage of each method, but do not repeat advantages or disadvantages.
c) Review the results individually, compare them with your estimated decision rule, and determine whether you can individually accept the proposed project for each method.
d) Explain the relationship between risk and return. Using the data above briefly explain the risks and return.
e) Draw an overall conclusion as to whether, based on the 3 methods, you would recommend the project go ahead.
f) If the CEO told you that the company had decided to go ahead with the project regardless of your findings in (e) above, state whether you would employ Company A or B to undertake the required work and why.
g) The CEO has asked you to explain the different sources of finance the business could access to raise the money to pay for the solar panels. Please ensure you include one type of long-term debt finance, one type of equity financing and one new funding opportunity that you may seek and why.