Explanation:
Hi guys, help me please.
Using a structured approach to decision making and the facts in the scenario above,
explain and evaluate the long term funding options available to the company to
finance their planned new division. (this is the quesion)
Scenario
PCP Ltd, established in 1990, manufactures optical instruments for markets in the UK
and the USA. Since 2007, their market in the USA has been in decline, due to an influx
of lower precision, cheaper supply from the Far East. Because of this, in 2009, PCP
decided to focus on supplying specialist optical products for use in Medical procedures
and research, opening a specialised manufacturing division based in Chicago. This
division has performed well, even though the costs of supporting management and
supply functions from the company HQ in the UK have been higher than was anticipated
in their original return calculations, which employed only NPV to establish the viability of
investment in the division. The company is now considering the development of a further
new division to research and develop new optical medical technology, following recent
market research data which indicated that the medical technology market is growing
across the developed world. PCP Ltd has not declared a cash dividend since 2017,
although a stock dividend was issued in 2020.
