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This task constitutes 45% of the overall mark. 10% of the overall marks for any task must be given to Structure and Format. ABC is a clothing manufacturer which has operated in the UK for the last 10 years. As part of its expansion plan, ABC has decided to set up an operating unit in another country. Produce a report by addressing the requirements below:

1. Evaluate the investment appraisal techniques that can be used by an organisation. In answering, you should describe alternative sources of finance available to an organisation that may be accessed through use of the techniques you describe.

2. Next, apply the relevant techniques to the following scenarios to conduct an investment appraisal for ABC Ltd. The current interest rate is 10%. The options available are:

USA: The estimated running expenses per annum amount to (GBP) 210,000. The expected revenue would amount to (USD) $700,000 per annum. In addition, an approval fee of (GBP) 22,000 has to be paid in advance for the company to be able to trade within the country on an annual basis.

France: It is expected that the running expenses would amount to 190,000 per annum and the annual turnover is expected to be (Euro) 450,000. The organisation will have to pay an approval fee of (GBP) 25,000 in advance for the company to be able to trade within the country on an annual basis. In addition, the organisation will also have to make a one-off Royalty Fee payment of (GBP) 25,000, regardless of the number of operating years.

Switzerland: The estimated running expenses per annum amount to (GBP) 200,000 while the expected revenue would be (Swiss Francs) CHF 380,000. The organisation would have to pay a licensing fee of (GBP) 30,000 each year. The government stipulated controls ensure that a routine inspection is conducted of the factory every three years, and the cost per inspection would amount to (GBP) 70,000.

3. Identify and explain risks that relate to the organisation when moving to the chosen international market, and suggest strategies and techniques to mitigate the identified risks. In doing this, you should: Demonstrate understanding of the different techniques for risk recording and monitoring Identify and explain an appropriate means of measuring and monitoring risk in the organisation SFM: LO 3 (pcs 3.1, 3.2, 3.3, 3.4)

Average Spot Rate Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6

USD 2.10 2.20 2.30 2.10 2.25 2.50

EURO 1.80 1.90 2.00 2.10 1.95 1.90

SWISS FRANCS 10.00 12.00 14.00 12.00 13.00

PLEASE I need explanation with formula

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