| AG is a foreign-owned enterprise established in Guangzhou.The main products are various labels related to clothing,including paper labels,fabric labels and RFID labels,etc.In the three years from 2014 to 2016,the traditional paper and fabric labels business are a downward trend,and the rising trend of RFID tag business is obvious.Therefore,AG intends to expand its production line to cope with the rising RFID tag business.The project is worth investing in terms of market,technology,and equipment;however,reliable economic decisions cannot be made.This article systematically studies the project,mainly to measure various financial decision indicators,and use this to determine whether it is worth investing in the project.First,I estimate the one-off investment involved in the RFID project,the cost incurred during the production period,and the sales volume and selling price of the product,so as to calculate the net cash flow of the project during each period of the cycle.Secondly,the discount rate of the apparel industry and RFID projects was determined.The main reference to(Zhu Tianlin,2014)was that the discount rate for textile and clothing industry was between 9.08% and 10.11%,and then compare to the weighted average cost rate of the parent company.The discount rate for the project was finally determined to be 10%.Again,the use of EXCEL correlation function to calculate the project’s investment recovery period,net present value,internal rate of return and modified internal rate of return and other evaluation and decision indicators,of which the net present value is 45.574 million yuan,the IRR rate of return is 27.2%,the revised IRR rate of return is 20.1%,which indicating RFID project is worth investing.Finally,a quantitative analysis of the risk factors of this project was conducted.First,the single factor sensitivity analysis method was adopted to select the three largest risk factors for the project: product sales,product selling prices,and direct material costs.Then,a multi-factor sensitivity analysis method was used to analyze and judge the comprehensive risk bearing capacity of the project.and propose relevant measures for controlling risks.Through this study,in the future new project investment,the AG company’s managements or investors can use the financial evaluation indicators to make investment decisions more objectively. |
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