The paper “ Investment Appraisal Techniques for Cagoo Clothing Plc” is a bright example of a finance & accounting assignment. The main aim of the report is to execute investment appraisal techniques for evaluating the project undertaken by Cagoo Clothing Plc to purchase a new shop in London by investing £ 7 million. The cash spent and received are assumed and justified based on the industry average and also after considering the financial data of large retailers such as Next plc. The source of finance for the new project is defined along with the cost of capital. Investment Appraisal Techniques for Cagoo Clothing PlcThe investment appraisal techniques help in determining whether a particular project is profitable in the long run.
The methods are net present value (NPV), payback period (PBP), and internal rate of return (IRR). These techniques are used for evaluating the new project that the owner of Cagoo Clothing Plc wants to undertake in London. The owners have the desire to purchase a new shop in London and want to invest £ 7 million. The cash inflow and outflow are assumed based on the industry performance. The cost of capital for the project is assumed to be 15%.
The source of finance for the owner of Cagoo Clothing Plc is personal savings and bank. The break-up of the source of finance is given below. Source of finance Amount in £ million Personal savings 2 Bank 5 Total 7 The following assumptions are considered for examining the project: The cash inflow and outflow for 12 years of Cagoo Clothing Plc are depicted below in the following table: The values of cash received are assumed based on the revenue data that are collected from the annual report of Next Plc, which is a renowned retail clothing company (Next Plc, 2015a; Next Plc, 2015b; Next Plc, 2015c). In the above table, the cash received column depicts the revenue that is expected to be generated by Cagoo Clothing Plc.
However, the cash spent is the total amount invested for continuing the operation or the working capital that is required for everyday operation i. e. cost of sales, operational and administrative expenses, etc. и в шутку и всерьез.
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