Case Study: Aurora Textile Company You are required to write a project report (maximum 2,000 words) to discuss

and analyse the following key issues: How has Aurora Textile performed over the past four years? Be prepared to provide financial ratios that present a clear picture of Auroras financial condition. List the factors affecting the textile industry. What do you think is the state of the industry in the United States? How should you incorporate the state of the textile industry into your analysis? Why should anyone invest money in the industry? What are the relevant cash flows for the Zinser investment? Using a 10% WACC and assuming a 36% tax rate, what do you get as the NPV for the project? What are the value drivers in your analysis? What do you estimate as the cost per pound for customer returns under the Zinser alternative? (Hint: for a replacement decision, analysts often find it helpful to prepare two sets of cash flows and two NPVs one for the status quo and one for the new machine.) Discuss the impact of being in a troubled industry on the value of the Zinser investment. Conduct a sensitivity analysis to illustrate that impact and discuss the result as an example of the costs of financial distress. Write a project report to the board of directors stating your recommendation about investing in the new Zinser machine. Part of your report should explain why it is better to invest in the Zinser or to pay a dividend to the shareholders. Be sure to explain the primary reasons that justify your recommended course of action. Your report should: Have a table of contents, introduction & conclusion. (No executive summary is needed). Show the details of the calculations in the appendix. Within the body of your report, analyse the key figures calculated in your appendix. Please include a bibliography if you use any other references other than your textbook and the study guide. Assessment of your assignment will take into account: Relevance of your answer to the questions set. Clarity of expression. Supporting documentation for arguments: for example presenting your calculations in your appendix and then citing and discussing key figures in your report. Logical planning and sequence.

Comprehensive coverage.

Also, marks will be allocated for presenting your report professionally including: The use of logical headings and sub headings that are numbered and also referenced through a table of contents. The overall presentation, including correct grammar, spelling and punctuation.

This project requires the students to apply the capital budgeting techniques in decision-making. The aim of the Assignment Two is to assess the students ability to meet all module learning outcomes detailed in part two. Strong analytical skills are required to complete this task. This Assignment Twomust be submitted to your Programme Manager in hard copy. See the deadline in table 2B. Descriptor table. Please read the Grade Descriptors in the Main Assignment Grade