(1) A firm's leadership team is considering three potential investments. The information for each investment is...

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(1) A firm's leadership team is considering three potential investments. The information for each investment is recorded below. You are expected to explain i) which can be considered the most attractive based on investment appraisals including NPV, PBP, ARR amongst others. ii) identify various forms of risk including, exchange rate risk, political risk, culture, different financial systems, demographics and other potential forms of risks you consider relevant. iii) explain which investment you would proceed with based on your views on investment appraisals and country specific risk. Investment A is a (50%) investment in a British manufacturing company and 50% in a Korean company Investment B is a (100%) investment in a Chinese manufacturing company Investment C is a (100%) investment in a Russian manufacturing company Investment A Investment B Investment C Sales 20X9 200,000 0 100,000 Sales 20X0 200,000 3,000,000 300,000 Sales 20X1 300,000 3,000,000 500,000 Sales 20X2 250,000 3,100,000 600,000 Sales 20X3 700,000 7,100,000 1,000,000 Sales 20X4 800,000 7,100,000 1,200,000 Sales 20x5 300,000 7,100,000 1,500,000 Sales 20X6 50,000 4,500,000 1,600,000 Initial cost 1,000,000 8,000,000 4,000,000 Value on 20X6 0 3,000,000 2,500,000 COGS 20% 40% 45% Tax on profit 10.00% 20.00% 5.00% Discount factor 15 16 5 (1) A firm's leadership team is considering three potential investments. The information for each investment is recorded below. You are expected to explain i) which can be considered the most attractive based on investment appraisals including NPV, PBP, ARR amongst others. ii) identify various forms of risk including, exchange rate risk, political risk, culture, different financial systems, demographics and other potential forms of risks you consider relevant. iii) explain which investment you would proceed with based on your views on investment appraisals and country specific risk. Investment A is a (50%) investment in a British manufacturing company and 50% in a Korean company Investment B is a (100%) investment in a Chinese manufacturing company Investment C is a (100%) investment in a Russian manufacturing company Investment A Investment B Investment C Sales 20X9 200,000 0 100,000 Sales 20X0 200,000 3,000,000 300,000 Sales 20X1 300,000 3,000,000 500,000 Sales 20X2 250,000 3,100,000 600,000 Sales 20X3 700,000 7,100,000 1,000,000 Sales 20X4 800,000 7,100,000 1,200,000 Sales 20x5 300,000 7,100,000 1,500,000 Sales 20X6 50,000 4,500,000 1,600,000 Initial cost 1,000,000 8,000,000 4,000,000 Value on 20X6 0 3,000,000 2,500,000 COGS 20% 40% 45% Tax on profit 10.00% 20.00% 5.00% Discount factor 15 16 5

Answer rating: 100% (QA)

In order to analyze the three potential investments based on investment appraisals and countryspecific risks we need to consider the financial data pr... View the full answer