Scylace Plc.

Executive summary

This report contains the evaluation of different proposals which are available with the company
Scylace Plc. in relation to building of two superstores or acquisition of other company, Helibeb.
The evaluation of the project is done in accordance with the different capital budgeting
techniques which involve the computation of the net present value. The evaluation can also be
done by comparing the return on investments in relation to opening the superstores at different
locations. The comparison of the accounting rate of return is also done in relation two different
locations. The decision also needs to be taken in order to decide the priority of the investment
projects as the amount available with the company to be invested is limited and hence
accordingly the project which gives more return is to be selected in order to ensure high growth
and prosperity of the company.

Introduction

The company is having proposals in relation to opening the superstore at two different locations
or acquisition of other company. The different proposals available with the company will be
evaluated by using different techniques of capital budgeting. The cash inflows in relation to one
location of the superstore are compared with the cash inflows in relation to other location of the
superstore. The earnings from the acquisition of the Helibeb plc is also evaluated and compared
with the earnings and net cash flows of superstores at different locations. Hence the decision is
taken on the basis of high earnings and net cash inflows in order to ensure that the company is
having highest benefit keeping in view the limited amount of investment. The investment which
will give highest inflows and profits will be given priority over other investments so that the
company can make the best use of the available financial resources. The financial resources are
to be utilized in a manner so as to provide adequate return on the investment. The available
financial resources are limited hence they will be utilized in the best possible manner thus they
will be used in an efficient and effective pattern.

Methodology for evaluating the proposed new superstore locations and prospective
acquisition

The methodology that is to be used for evaluating the different proposals depends upon the
available data. The proposal in relation to building the superstore at different locations will be
done on the basis of the evaluation of the cash inflows and cash outflows from both the locations.
The net present value will be used as the basis for the decision for opening the superstore at one