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Introduction Wheybridge Ltd has developed a new product- the printer which has great potential can be sold to all computer users However the sales would exceed the existing capacity Wheybridge has to develop its own delivery recruit staff and purchase vehicles Therefore it is necessary to budget the investment amount and analyze available finance sources to invest this project Moreover with the aid of investment appraisal managers should make a decision whether to invest the project and anticipate the profits and risk 1 Investment Budget 11 Investment Budget of Fixed Asset The fix asset investment includes plant constructing vehicles purchasing and staff training The table below shows the composition of fix asset investment Num Item Amount Percentage in total fixed asset investment 1 Constructing 1500000 50 2 Vehicles purchasing 100000 333 3 Staff training 40000 133 4 Provision 10000 33 5 Investment on fixed asset 3000000 100 12 Investment Budget of working capital Working capital is defined as the difference between current assets and current liabilitiesJaffe Ross and Westerfield 1998 It must maintain an investment in working capital The calculation of working capital adopts subentry calculation method According to the forecast of production inventory sales and referring to the average working capital in the printer industry the working capital of this project is approximately 1000000 13 Total Investment Budget Total investment Investment of Fixed Asset Investment of working capital 3000000 1000000 4000000 2 Finance of the Project There are various sources of finance for the company The source of finance should be chosen according to the situation and features of the project Four sources of finance can be adopted for Wheybridge Ltd They are retained profit bank loan ordinary shares
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