Investment Analysis and Recommendation research

Investment Analysis and Recommendation

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Introduction

The organization has strengths for the relative stable demand. This has led to the option of individuals allow the analysis of the different assessment of operations for the organization in the analysis of the different activities, (Henderson, 2007).  The real options for the firm can be differentiated into the company or industry specific. The impact of the potential real options will also be analyzed.

Potential real Options

The first option is the Entering the biotechnology and technology market.   This is a company specific option. The management has a strong capital base and a stable market demand. The management will be required to offer the assessment of the different areas that can be assessed in the motivation of the different providence, (Henderson, 2007). The second real option is the Growing of the market segments. This is based on the company specific operations.  The growth will require management to search for the different cheap marketers and suppliers in the market. This will help in increasing the retained earnings for the organization, (Terrence, 2011).  The management will be able to enjoy the high profit margins due to the investment into the new growth of markets.         

             The third real option is an investment on specialized workers. This option is based on the company specific option. This will escort to the decrease of the wastage of time and financial resources.  The management will have small time for training, (Henderson, 2007).  The different changes in technology and customer demands require employees to be conversant with the changes. The management has to coach or train employees on the definite ways that will motivate the offering of the demands in the management.  The fourth option is the shift of focus to export markets the organization is required to search the different countries that require the products.  This option is industry specific. The management will assess the definite requirements that individual organizations could be requiring. The management will assess the activities with the definition for the assessment of the different operations for the management, (Henderson, 2007). The identification of the markets will allow the attraction of investors and market demand for their products. This increases the profit margin for the organization.

Capital Budgeting Process

 The real options offer the definite need to assess the changes that occur in the assessment of the risk nature of the cash flows and possible outflows.  The capital budget will be affected by the increased need for valuing the project processes, (Terrence, 2011). The first option for entering the biotechnology and technology market will offer the following influences to the capital budgeting processes.  The capital budgeting will be affected by this option will be based on the working capital, availability of funds and the structure of the capital, (Terrence, 2011).

The proposal for the working capital could affect the operations of management with regard to the analysis of the different problems that affect the motivation and processes for the organization. The structure of capital will limit the organizations operations in the assessment of the entry process. The management will be required to restructure the capital structure or limit the overall option of entering into the market.

The second real option of growing of the market segments can influence the capital budget in the following ways.  The factors of earnings, capital return, accounting practices and trends of earning will affect the capital budgeting process, (Henderson, 2007).  The expected earnings for the management will affect the overall approach that will generate the activity requirements in the management. The firm will be required to assess the overall approach that generates the quality service requirements for the different individuals in the organization.

 The third option can affect the process of the capital budgeting in the following manner.  The earnings and the immediate need of the projects will affect the motivation of the approaches for the generation of the different activities for the organization, (Terrence, 2011). The management will have to restructure their budget for funding the training and coaching for the different individuals in the organization. The immediate need for the project or earnings will assure the assessment of the different accounting practices.

The fourth option of shifting the marketing to the export market will affect the management in the analysis of the different approaches that can be implemented for the purpose of assessment.  The structuring of the capital, assessment of the government policy, capital returns and the assessment of the different accounting practices. The trends for the earnings will require management to search for ways of allowances for the different changes in the market.

Conclusion

             The capital budgeting is defined as the process that the businesses are able to determine whether the projects are worth the effort or pursuit.  The real option affects the capital budgeting process through the overall influence in the outflows and inflows of finances.  The assessment requires the determination of whether a return that is generated meets the required benchmark. This examination focuses on the influences of the suggested real options to the completion of the capital budgeting process.

Reference

Henderson, G. (2007). The Capital Budgeting development: Elsevier Publication:  Journal on Hypothesis and Practice. Interfaces, 17, 2, 78-90

Terrence J. (2011). The venture Tax Credit in the principal Budgeting Process: An Attitudinal contour of Financial Managers. Journal on Economics and Finance, 15, 2, 212- 250

Appendix

NPV Calculation