Case study on Wilson Construction Essay Example | Topics and Well Written Essays - 1000 words

Case study on Wilson Construction - evidence ExampleThe best option for the company is trying to increase its revenue base in battle array to improve the situation. Just having two or three projects supporting such a large grease ones palms is non feasible and hence the company should market more often to attract more customers. In case these are two exhaustive options, the company should clearly select the option b because it is concession a lower negative number and hence if the company wants to save its define it should try to call for the option b. Money treads of go downs do not reflect the time value of money. each(prenominal) economies cause the phenomenon that the purchasing power of money constantly falls with the passage of time. Hence, inflation is needed to be interpreted into account in golf-club to arrive at the real rate of return or rate of returns that are adjusted against inflation. The discounting factor of 23 percent has been adjust by multiplying it b y 104 in order to arrive at the inflation adjusted discount rate to give better idea regarding the position of the company and how much it should earn in order to safeguard its position against falling value of a dollar due to inflation and alternative projects that are available to a company. This way the money return has been adjusted to real return and provides a better picture of how much return the company of necessity to earn on its projects to safeguard the value of its wealth in real terms and to hit accredited that it is not losing money. If a company does not pay heed to the time value of money it cannot describe whether it has made or lost money and hence it is considered one of the fundamental concepts of finance and needs to be taken into account every time the company needs to make an important decision. This will make sure that the companys resources are being used for earning proper returns and not just money returns that are not adjusted against inflation. Given the scenario it can be said that there are several(prenominal) factors that should affect the viability of ALII. These include how much saving using a faster crane would be made. All the companys processes would become more efficient and it would save some money, but the question does not speak about it and if all of this is taken into account, the projects NPV would very well be positive. separate than that, there will be other factors like financing options, providing the financer with a collateral, impact of this purchase on the taxes for example, the company can use diminishing balance method and charge high depreciation evaluate to its balance sheet in order to get a saving in taxes. All of this should be taken into account and the company should also necessitate some good finance managers and should not bank on amateur finance people who do not know about the jack of the problem and their discussion is nothing but laymans observation of the issue. Hence, the best thing fo r the company is to hire some specialist finance people who have better information than the current participants of the meeting who do not