Bicycle Company Future Expansion: Mystro-Wheels

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[Bicycle Company Future Expansion: Mystro-Wheels]

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Bicycle Company Future Expansion: Mystro-Wheels

Purchase Option

Year

Outflow

Inflow

Cash Flow

0

390000

0

-390000

1

0

0

2

0

0

3

73000

73000

4

73000

73000

5

73000

73000

NPV

(£35,449.06)

IRR

-13%

Payback

2.3

Rent Option

Year

Outflow

Inflow

Cash Flow

0

390000

0

-390000

1

66000

66000

2

66000

66000

3

66000

66000

4

66000

66000

5

66000

66000

NPV

(£34,854.55)

IRR

-5%

Payback

3.2

Rent Option should be chosen as the NPV of Rent Option is greater than that of Purchase Option. As per the calculations attached in excel sheet, we can easily say that Proposal 3 is the most suitable one for Mystro-Wheels. We have analyzed the given cash flows of two Proposals using techniques such as Net Present Value (NPV), payback period and Internal Rate of Return (IRR). The reason for analyzing two Proposals by multiple techniques is to increase the reliability and authenticity of our forecast. From the following table, we can easily see that Net Present Value of Rent Option is greater than that of Purchase Option. We accept the Proposal having highest value of NPV because higher the NPV, greater would be the returns and profitability of the Proposal.

The role of a financial manager cannot be solely the command of the finances; it also needs to include the ability to help the organization achieve its goals. In most governmental organizations? the acceptable leadership approaches have moved away from power-oriented autocratic styles to ones characterized by participatory environments. This shift has occurred within the context of the changing nature of the workforce in recent decades. The increased educational and economic levels of today's workforce have made participatory styles of leadership the preferred models for organizational success? although the definition of the best leadership style ultimately depends upon the situation. Governmental managers must be able to assess the work environment and adapt their style accordingly.

The ability to assess the situation within the organizational setting means that the individual must be able to assess her own styles of leadership and interactions. Interacting with the behavior styles of others in the organization is part of this process? in addition? the process involves reviewing how you deal with conflict and how you address problem solving? and recognizing the need to maximize the roles of other players in the organization. Conflict is inherent in any organization and how the leader addresses it helps to define the value of the involvement of group participants. The issue is not whether conflict exists but rather whether it is being used constructively for issue resolution rather than causing confrontation. For example? betting on the outcome of the World Series creates a conflict between two parties; however? the conflict does not have to become personal and confrontational. Depersonalizing conflict and dealing with the issues is the key element of successful conflict resolution.

The task for successful leaders is to determine the applicability of these theories and practices to their environment and to develop their peer? interactive? and conflict management skills in order to deal with the ambiguity of the workplace. The development of a leadership style(s) that is effective in that organization and at that time is a critical element of successful leadership. The most effective leader is able to match the style to the situation.

Effective financial managers have developed resource allocation skills for their ...
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