Pietro Yon, a local businessman, owns and manages a number of retail stores that sell a range of homewares.
Pietro is a member of the local business Chamber of Commerce and has been asked to chair a committee to research and study the success of Samsung PLC. The Chamber believes that there may be some useful learning from this study which members of the Chamber could use. You have been asked to provide specialist support to the committee and you are required to produce a range of materials for members of the committee to use.
You must produce a presentation for Pietro Yon to use at the next meeting of the Chamber of Commerce. The presentation should be based on your research of Samsung PLC and other relevant information. It must be accompanied by supporting notes.
Your presentation must include the following:
A meeting has been arranged with Pietro Yon and other members of the committee and you have been asked to produce a paper for discussion which provides:
Produce an information leaflet for the Chamber of Commerce to distribute to the members. The leaflet should assess the following:
Pietro Yon has been supplied with information from a component manufacturer who has asked for advice on the best project to accept for the purchase/replacement of a piece of machinery.
The company are considering selling their old machine that has a capital cost of £260 000 and replacing it with an up to date model costing £220 000. For immediate purchase, the company will receive £120 000-part exchange allowance.
Both the current and new machines are able to meet the expected company demand, estimated at:
1 90 000
2 50 000
3 30 000
After three years, it is predicted that demand will be zero due to the technological developments in the industry.
The following data has been provided for the existing and new machine:
|Current Machine||New Machine|
|£ per unit||£ per unit|
The company’s cost of capital is 15%
Extract from the present value table for £1 at 15%
Pietro would like you to produce a business report that can be given to the company offering advice on the best course of action for the purchase/replacement machine.
Prepare a report that evaluates the capital expenditure proposals using appropriate financial techniques.