What factors determine and intervene in foreign exchange rates? Explain your arguments by providing relevant theoretical / empirical literature and use relevant data.

Format of the assignment:
1) Title.
2) Abstract: A summary of assignment not more than 120 words.
3) Introduction/Background: In this section, you need to provide the relevant background to the topic by referring to the core issue that you aim to address in the assignment by citing relevant literature and also provide the objective of your assignment.
4) Literature review: In this section, you need to begin with relevant theoretical approaches that link the theory to the practice and then provide good amount of empirical literature on the given topic.
5) Analysis/Policy implications/recommendations: This is very important section of your assignment, so you need to pay considerable attention to this section. Specifically, you need to make good efforts to collect the relevant data and do some sort of analysis using basic statistical tools (mostly in excel) to draw the graphs, growth rates, averages, correlations, etc., once you do the analysis then you have to provide the relevant practical and policy implications based on the findings that you obtain through the analysis and make sure to provide supporting citations to your arguments in this part of assignment.
6) Conclusion: Here, you need to summarize your assignment by highlighting core findings, implications and take away knowledge from this assignment.
Organization – Compulsory to follow the following suggestions:
1) Your assignment of not more than 2500 words (plus or minus 10%), excluding Abstract/Tables/Graphs and References;
2) Font: Times New Roman;
3) Font Size: 12;
4) Align text to both the left and right margins;
5) Line and paragraph spacing: 2;
6) Please refer a minimum of 15 journal articles;
6) Please use the consistent referencing style and in alphabetical order.
7) Please make sure to write the assignment in your own words and avoid plagiarism and similarity issues; otherwise it will have a severe impact on your grade.
Marking Guide:
1. Title and abstract (10% weight).
2. Introduction/Background (15% weight).
3. Literature review (15% weight).
4. Analysis/Policy implications/recommendations (40% weight).
5. Conclusion (10% weight).
6. Organization of the assignment (10% weight).

Payback Period IRR ROI NPV Analysis

Q2. Investment Options
2.1
Payback period of R&D
Year Net Cash Inflows Ending Uncovered
Investment
0 (300,000) (300,000)
1 50,000 (250,000)
2 100,000 150,000
3 100,000 50,000
4 125,000
5 125,000
6 50,000
Payback period 3 + 50,000/125,000 = 3.4 years
Payback Period for Expansion on Kids Market
Total sneakers market in 2023 is 50,000 pairs, but Ecosneak thinks it can capture 10% of the
market in 2024. So, they will sell 50,000 x 10% = 5,000 pairs.
They will sell 5,000 pairs at a profit of €10 therefore they will make a profit of 5,000 x 10 =
£50,000.
However, the overall kids’ market will grow by 5% per year over the six-year planning
period, so we need to add 5% each year.
Year 1 – 50,000 + (50,000 x 5%) = 50,000 + 2,500 = 52,500
Year 2 – 52,500 + (52,500 x 5%) = 52,500 + 2,625 = 55,125
Year 3 – 55,125 + (55,125 x 5%) = 55,125 + 2,756.25 = 57,881.25
Year 4 – 57,881.25 + (57,881.25 x 5%) = 57,881.25 + 2,894.06 = 60,775.31
Year 5 – 60,775.31 + (60,775.31 x 5%) = 60,775.31 + 3,038.77 = 63,814.08
Year 6 – 63,814.08 + (63,814.08 x 5%) =63,814.08 + 3,190.70 = 67,004.78
Year Net Cash Inflows Ending Uncovered
Investment
0 (170,000) (170,000)
1 52,250 117,750
2 55,125 62,625
3 57,881.25 4,743.75
4 60,775.31
5 63,814.08
6 67,004.78
Payback period 3 + 4,743.75/60,775.31= 3.08 years
The payback method is a simple to use approach that favours projects that produce
substantial cash flows early on. This is beneficial because early cash flows boost a company’s
liquidity while reducing the likelihood of future issues. This technique, however, overlooks
cash flows occurring after the payback period (Oakshott, 2020). For instance, large cash
flows are generated in years 4 and 5 with the option of investing in R&D but are not
considered in the payback approach. Also, even though the payback technique considers the
timing of project expenses and benefits, it is not interested in maximising the profit of the
business owners (Atrill and McLaney, 2019).
2.2
R&D 8%
Expansion into the kids’ market 9%
NPV for R&D investment
Year Net Cash Inflows Discount Factor 8% Present Value
0 (300,000) 1 (300,000)
1 50,000 0.926 46,300
2 100,000 0.857 85,700
3 100,000 0.794 79,400
4 125,000 0.735 91,875
5 125,000 0.681 85,125
6 50,000 0.630 31,500
NVP= 119,900
NPV for Expansion into the kids’ market
Year Net Cash Inflows Discount Factor 9% Present Value
0 (170,000) 1 (170,000)
1 52,500 0.917 48,142.5
2 55,125 0.842 46,415.25
3 57,881.25 0.772 44,684.32
4 60,775.31 0.708 43,028.92
5 63,814.08 0.650 41,479.15
6 67,004.78 0.596 39,934.85
NVP= 93,684.99
According to the NPV expanding into the kids’ market will result in a smaller profit than
investing in R&D and hence investing in R&D will be the most profitable one.
2.3
An investment’s internal rate of return (IRR) is the discount rate that when applied to its
predicted cash flows yields an NPV of zero (Atrill and McLaney, 2019). In most cases, IRR
cannot be determined directly. Iteration (trial and error) is the most common method used.
When discounting at 8%, the NVP for the R&D investment is positive, implying that the
project’s rate of return is greater than 8%. Therefore, increasing the discount rate in theory
will reduce the NPV because the discounted figure decreases as the discount rate rises.
Lets try discount rate of 20%
Year Net Cash Inflows Discount Factor
20%
Present Value
0 (300,000) 1 (300,000)
1 50,000 0.833 41,650
2 100,000 0.694 69,400
3 100,000 0.579 57,900
4 125,000 0.482 60,250
5 125,000 0.402 50,250
6 50,000 0.335 16,750
NVP= (3,800)
IRR = r1 + [NPV1/ NPV1 – NPV2] x (r2-r1) = 8 + [119,900/ 119,900 + 3,800] x (20 – 8) =
= 8 + (0.97 x 12) = 8 + 11.64 = 19.64%
2.4
This report is written with a view to helping Ecosneak’s management to reach a decision
on the best investment option. First, the payback period for both options is calculated. The
payback method identifies when the net cash flow becomes positive (Wisniewski and Shafti,
2019). The option of investing in R&D has a payback period of 3.4 years while the option of
expanding into the kids’ market has a payback period of 3.08 years. The two options have
little difference between them however, expanding into the kids’ market should be favoured
since it has a shorter payback period, which means it will pay back the initial investment in a
shorter amount of time. The payback period method, however, has some clear drawbacks. It
does not consider the overall project’s profitability and cash flows once the payback period
has ended. Therefore, investing in R&D given that the difference in the payback period of the
two options is not significant is a better option if the company cares about its profitability
since, the cash flows after the payback period are greater than those of the second option.
The second method used to assess the two options is the NPV to examine their present
values. Investing in R&D has an NPV of €119,900 while expansion into the kids’ market
option has an NPV of €93,684.99. As a result, the R&D investment will be recommended
because it provides a higher NPV. Finally, the third investment method calculated is IRR,
which refers to the discount rate for a project that will result in an NPV of zero (Wisniewski
and Shafti, 2019). Considering the R&D investment option, it has a positive NPV at a 9%
rate so, the NPV will decrease if this rate rises. If a rate of 20% is selected an NPV of -3,800
will be obtained. After, using the formula, option A’s NPV value would be zero if the
discount rate was 19.64%. Hence, investing in the R&D option will have a positive NPV if
the real-world discount rate is less than the IRR. So, in case Ecosneak’s management is
confident that the discount rate will not increase more than 19.64% over the project’s
lifecycle, its NPV will remain positive. As a result, from the information given above the
option to invest in R&D should be preferred.

Favorable vs unfavorable leverage

What is meant by the terms “favorable” and “unfavorable” leverage? Give examples.

Ten ideas for a new business startup

Submit a journal of ten ideas and describe how these ideas meet consumer needs. These should be original ideas that show a wealth of critical thinking. Each journal should include an introduction and conclusion, should be 4-6 pages (double spaced), 2.54 cm margins (the default on MS Word), and 12 pts size . The paper should follow the APA guidelines for format and citation. |

Financial Statements Assignment with Answers

For this Assignment, estimate a Profit & Loss Statement for Scenario A OR Scenario B as seen below.

Once you view the Unit 10 Assignment Spreadsheet, you will see where to enter the monthly totals. Review your spreadsheet totals and answer the following questions:

What general observations can you make about the company based on the profit and loss results? Note specific areas of concern and/or identify strengths. Does the company need to borrow money at the end of the year to meet expenses? Explain why or why not? If the company does need to borrow money, how much would you recommend and from what source(s)? If the company does not need to borrow money, what other recommendations might you have based on your analysis of the results? Make sure to provide detailed explanations in which you carefully consider all aspects of the profit and loss spreadsheet (minimum 250-word response).

Submit your completed estimated P&L spreadsheet and minimum 250-word, double-spaced, APA-formatted response (include an additional title page) to the Unit 10 Assignment Dropbox. For additional help with the current APA format, consult the Unit 9 Reading area for the PG Writing Center’s APA citation and reference guides.

Scenario A: Unit 10 Assignment Assumption

• Assume monthly gross sales are $280,000 October, $290,000 November, and $345,000 December.
• Assume Inventory purchases are $70,000 October, $75,000 November, and $95,000 December.

• Assume the owner gets a cash disbursement of $45,000 in October, $51,000 in November, and $52,000 in December.

• Assume wages and salaries are 48% of gross monthly sales.

• Assume rent is $9,500 a month.

• Assume utilities are 5% of gross monthly sales.

• Assume a tax prepayment of $16,000 in October.

• Assume bank interest on the note is $1,500/month.

Scenario B: Unit 10 Assignment Assumption

• Assume monthly gross sales are $275,000 October, $310,000 November, and $325,000 December.

• Assume Inventory purchases are $60,000 October, $75,000 November, and $85,000 December.

• Assume the owner gets a cash disbursement of $30,000 in October, $35,000 in November, and $40,000 in December.

• Assume wages and salaries are 50% of gross monthly sales.

• Assume rent is $10,000 a month.

• Assume utilities are 10% of gross monthly sales.

• Assume a tax prepayment of $12,000 in October.

• Assume bank interest on the note is $2,500/month.