ACB Training with an annual turnover £25million, is contemplating relocating to newpremises. Two possible sites are available with slightly different features and aspects. There-location will help them to be able to meet clients needs more effectively.
Investment required for the move = £10millionThe location is in the heart of the city centre and an estimated increase of 25% is expected if this option is chosen.
Investment required for the move = £8millionVery close to city centre and business will increase by 10% if this option is selected.ACB Training private limited company formed 10 years ago by 5 ex-lecturers. The 5 of themare the main shareholders but there is also a shareholder who was a local business personwho approached 2 of the owners to run a training course for her company.They have the following options to generate finance:
The management is thinking of generating the required finance by issuing 1millionnew shares of £10 each.
ne of the banks with which ACB has long financial relations has sent a quote for theloan at interest rate 7% per annum for a maximum of 10 years.
The retained earnings account showed a balance of £25 million in the last yearsbalance sheet.
ne of the competitor companies has offered to help ACB but the investors areexpecting 80% share of the profit in the future venture.
Evaluate the costs of the sources of finance. Also mention how the option selected willreflect on companys financial statement.
Write an essay on the importance of financial planning and how the needs of decisionsmakers can be met?