Wonderland (Corporate Finance)

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Corporate Finance Assignment Introduction Wonderland Confectionaries Inc. owns a successful chain of Restaurants and the Company is considering diversifying its activities by investing in theme park business through the construction of a theme park. The theme park would have a mixture of Family activities and thrills. Wonderland has just spent £400,000 on market research into the theme park, and is encouraged by the findings. Discussion It is a considerable reality that the management of the Wonderland’s need to understand the importance of concept of present value while making the decision for investment in the Wonderland’s amusement because in the world of corporate finance no body can deny from the importance of present value calculations are widely used in business and economics to provide a means to compare cash flows at different times. Present Value’s definition and simplistic formula used for normal purchases, the concept’s importance to corporate finance and why present value is the very first topic taught in finance classes explain that present value is an essential knowledgeable tool to ensure we make the best decisions with our money (Ross et al, 2010). Basically present Value means “the present value of a future sum of stream or money of cash flows render a particular rate of return. At the discount rate future cash flows are discounted and the higher the discount rate, the lower the PV of the future cash flows. Finding out the allow discount rate is the central to properly valuing future cash flows, whether they are obligations or earnings.” Through the definition itself, an importance to corporate finance is explained as well as why professors begin a finance course with a basis explanation in the time value of money – discounting as well as investment risk included (Stephen A. et al, 2008). In the considered investment project

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