Assessment 2
- What proportion of the capital structure will come from debt or equity? Why?
Part two of the assessment consists of an evaluation of the financing requirements of setting up the project.
Specifically the following questions should be addressed within this part of the assessment:
- What proportion of the capital structure will come from debt or equity? Why?
- Will capital be raised locally or from head office? Why?
(1000 words for the two capital structure questions above)
- What are the working capital implications of the project? (500 words)
- What is an appropriate cost of capital for the project (this will provide your discount rate for part three of the assessment)?
- How was the cost of capital calculated? Explain your calculations. (500 words)
Part two of the assessment will therefore involve discussion and numerical analysis. You should decide upon the capital structure of your project in terms of proportions (%) and be able to evaluate and explain your decision. You should present clear calculations for your cost of capital along with an explanation and evaluation of your approach.
Total word limit = 2000 words.