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Mathematical Theory of Accounting and Financial Value

The most crucial part for an organisation is always to take investment decisions. It requires lot of consideration of the factors such as market risk, politics and of course the rate of return as they are exposed highly in terms of finance (Ye & Tiong, 2000). There are many methods which gives the organisation the symmetries between the economic levers and financial limits and as a comprehensive perspective to investment decisions and the enchantment of companies value (Martin, 2020).

In the current scenario of KIBT Ltd, the company should go with “Project B” and invest in that plan as per the cash flow structure has been shown in the table mentioned below.

year

Project A

12% Return

Project B

12% Return

0

660000

950000

1

250000

223214.286

190000

169642.857

2

190000

169642.857

170000

151785.714

3

180000

160714.286

180000

160714.286

4

160000

142857.143

260000

232142.857

5

120000

107142.857

570000

508928.571

6

140000

125000

320000

285714.286

Total Cash Inflow

268571

558928

Here, the firm has a requirement of 12 per cent return which gives them a high cash inflow in Project B as you can see the table above with the help of Net Present Value (NPV) method which helps to evaluate between two hypothetical power projects that show the NPV risks involvement and provide a better decision to the organisation.

So, after all the evaluation by the team, we recommend KIBT Ltd to invest on Project B here.

References for KIBT Ltd Investment Recommendation

Martin.Y., (2020). An investigation on the net present value. A Mathematical Theory of Accounting and Financial Value, 1-44. http://dx.doi.org/10.2139/ssrn.3123550

Ye.S & Tiong.R., (2000). NPV-at-Risk Method in infrastructure project investment evaluation. Journal of Construction Engineering and Management, 126 (3), 1-10. https://doi.org/10.1061/(ASCE)0733-9364(2000)126:3(227)

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Accounting and Finance Assignment Help

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