The paper “ TNA Pty Ltd - Capital Budget Evaluation” is an outstanding example of the business plan on finance & accounting. Every business requires some form of financing at some time. in this case, TNA Pty. Ltd. , a global leader in food packaging and processing, industry, requires funds to purchase a majority interest in a small local firm in Vietnam. The firm manufactures equipment for the food processing and packaging industry. This firm has a factory in a convenient location close to the ports and transport routes and a loyal and hardworking workforce.
Unfortunately, the factory has outdated equipment and a relatively high-cost structure and the firm is increasingly falling behind its competitors. However, buying the firm may provide an opportunity for TNA to establish a production facility in the heart of Asia without the problems and lead-time involved in developing a Greenfield facility. Following further inquiries TNA management determine that they could complete the takeover of the Vietnamese company that owns the factory for an investment of $A 10 million, $A 6 million of which would be to purchase 100% of the Vietnamese company and $A 4 million in the form of capital equipment to replace some of the aging factory infrastructures.
However, the management of TNA is undecided about their best option for sourcing the $A10 million required for the transaction. This section discusses the various option of saucing the funds to purchase the business, There are a number of options available for TNA management to raise funds to buy the Vietnamese firm. One important thing to note is that $10 million is a relatively large amount, getting the whole amount from one source may be difficult.
Therefore, it is advisable to source small amounts from several alternatives that are available. The alternatives include; Bank loan: as mentioned earlier the amount of money required to buy the Vietnamese firm is quite large. Getting a bank loan is one of the appropriate alternatives that TNA management can seek. However, it is important to note that banks have strict assessment criteria. A strong business case needs to be presented.
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