People Classification Essay Example | Topics and Well Written Essays - 750 words

People Classification - Essay Example Over the years that I served in the army, I have learnt that a single soldier may shine out as the star of the play, but the true success of the Unit always is a consequence of the team that works together. It not only includes the other comrades, but all those people who remain behind the scenes, in a supportive role. This has made me realize, that one should never qualify success on the face of how things seem. The tip of the iceberg can never truly explain what the entire emblem stands for. Nothing is skin deep, not even skin itself! There is a lot more struggle and undertaking that goes into achieving a task that is otherwise visible. And I feel that it is in making all this effort that the secret of life lies. Success is not attained by achieving something, but by treading the path. For instance, in war, the victorious army has seemingly successful soldiers celebrating what they have achieved. But what about their friends who died in the struggle, to make sure their comrades wou ld achieve the same? The answer is very simple; they are in effect more successful than those who survived, because they believed in something so much, that they were willing to give away their lives for the cause. And that is the true measure of success. The fact is, that when one defines a path for oneself, then merely walking that path is an assurance of success.   Rationalistically, nobody can achieve everything. Further, the natural shortfalls in our lives, including financial, physical and emotional emergencies.

Religious teaching Essay Example for Free

Religious teaching Essay Religious teachings offer the only sound basis for moral reasoning. Critically examine arguments for and against this opinion. Morality is the knowledge and practice of what is moral, which may, according to your personal view be instinctive, be associated with religion and culture, or be acquired by reasoning. Most, if not all religions have a human moral code, which follows Gods will. Religious people will consult their religious text, whether it is the Bible, Quran or Torah ect, when making a moral decision. Very often these religious texts will lay out a set of rules or guide lines. In Christianity it is the 10 Commandments, in Buddhism it is the 8 Fold Path. Although these rules do provide a good moral base, if taken to their logical conclusion they are objective and absolute, leaving no room for the flexibility needed in todays society. This is taking a Deontological approach; this is when a person has a set of rules that they consider to be absolutely right. They abide by these rules, as they are more important than the effect or outcome. We can use the example of abortion and the 10 Commandments. These religious laws state that Thou shalt not kill. If taken absolutely this means that abortion is wrong no matter what the circumstances are, even if the child will be born severely disabled or will be born into extreme poverty. For many people moral values are relative to a specific society, time and circumstances, and their moral view can change through changed circumstances, needs, beliefs and knowledge. This flexibility is known as relativism and is the opposite of absolute. This is also known as taking a Consequential approach, when a person looks to the outcome, and decides how to act to achieve that result. They have in mind the aim and believe that actions can be deemed moral if they achieve that aim the end justifies the means. Because of this many individuals often experience conflict in making moral decisions because they have no absolute code of what is right or wrong. There are several different methods subjective morality: Utilitarianism is the view that you decide whether an action is right or wrong by looking at the consequences, and you should choose they action that will produce the most happiness/least-suffering to the greatest number of people. If we consider whether abortion is right or wrong using the utilitarianism view we would have to say that it depends on the individual situation, and whether the baby would be born healthily or not, and whether the baby would be loved, and the number of people affected by the pregnancy, amongst other things. Natural Law states that morality should use the natural form of behaviour, and that humans and society should follow this natural law. Therefore anything that is deemed as un-natural is wrong. This means that in the case of abortion it is always wrong, as pregnancy is a natural occurrence and it should not be ended un-naturally. Social contract theory claims that laws and morals are a human invention upon which we agree to make life better for ourselves. When making a moral decision a person would have to consider the impact upon society and peoples freedom, amongst other things. Once again considering the case of abortion, a person using social contract theory, would consider the effect having a baby would have on their lives, the lives of people around them, and how the life of the bay would be once it is born. I conclude by saying that I think that religious teachings do not offer the only sound basis for moral reasoning. I feel that the individual situation also needs to be considered when making a moral decision as every case has different circumstances. I also feel that although the religious laws do give a good, sound basis for morality the objective and absolute rules stated by religion do not leave room for the flexibility needed in todays society.

Anti-bribery laws in the U.S: Ethics and Airbus Essay -- internationa

International business is risky especially when companies involved play by a different set of rules. Knowing the differences in culture, politics and the primary legal environments of a host country, allows the companies to conduct business and make quality decisions based on the business climate, creating a marketing mix specific to each country and region (CSU, module 3, 2014). Detailed research helps companies create a solid marketing mix, but does not guarantee that the obstacles of payoff’s and bribery won’t hinder the outcome. Below the surface level of many sales negotiations, like those seen in our case study of Boeing and Airbus, are driven not on their marketing mix, quality, reputation or reach, but rather on power, bribery, politics and corruption, which plays a very real role in international business negotiations. Anti-bribery laws in the U.S. were established to prevent the rampant corruption exhibited in the Airbus case study. Similar anti-corruption laws do not exist in many of the host countries the U.S. does business with. Host county’s laws and regulations take on different forms especially when power, money and politics are involved, manipulating or creating a new set of rules to benefit their own selfish needs. Savvy sales negotiators, like those at Airbus, seek opportunities through loop holes, off shore accounts and large sums of bribery money, to entice country officials or others with the authority to make purchases to commit to Airbus. A more uniform worldwide approach to international laws needs to be adapted, implemented and more importantly enforced, so all companies involved can conduct fair business practices under the same set of rules. Legal or Illegal who Benefits Airbus and... ...d sets the foundation for companies to mitigate disputes through conciliation, arbitration, or, as a last resort, litigation. Most international businesspeople prefer a settlement through arbitration rather than by suing a foreign company (Cateora, Gilly & Graham, 2013). Based on marketing strategy, had Airbus adopted anti bribery laws prior to the many cases in question, the outcome might not be favorable to them. It would not have been in the best interest of Airbus to follow commonly accepted business practices established by the U.S.. Works Cited Cateora, P., Gilly, M., & Graham, J. (2013). International Marketing 16th edition: New York, N.Y: Mc Graw-Hill Irwin companies, Inc. Colorado State University-Global Campus. (2010). Case 2-4 - Ethic and Airbus [Blackboard ecourse]. In MKG 400 – International and Multi-Cultural Marketing. Greenwood Village, CO.

On torture

In that day and age it was all too easy for criminals to flee from a crime UN accused and unpunished seeing as there was no major arm of law present to further investigate certain crimes or follow up on possible suspects, s a result when an individual was caught for a crime or under suspicion they were tortured as a means to obtain a confession. The Justice system and the practice of torture presented both the victims and the accused with many problems however this was all due to the harsh realities of the 18th century.From a modern point of view torture is seen as outrageous and inhumane however in the 18th century it was practiced as an attempt to set an example for society and lower the overall crime rate, although the barbarity of these acts reflects poorly on behalf the 1 8th century society there were still many people who saw torture for its egregious nature and advocated for more tolerant alternatives.Torture was used since the beginning of collocation however the practice be came extremely popular during the 18th century, an era where using brute force was regularly encouraged. Torture existed well before the eighteenth century; the Greeks and Egyptians also used torture as means of obtaining a confession however torture for the purpose of interrogation was usually conducted in private it was hidden because they were aware of the social and political Implications that followed.As Roman law adapted torture became part of the official Justice system of the 1 8th century, a system where the accused we tried, tortured and executed in public so that everyone was aware of the punishment that would follow crime. Torture was at its peak during the inquisition period where heretics were persecuted and tortured if they refused to change their religion or admit they were not Roman Catholic. It was this period, which were called â€Å"the witch trials† that reintroduced torture to Europe.Slaves and others of lower class were also falsely accused and tortured for petty individual would suffer being stretched on the rack, a public whipping or exposure in the stocks. Torture was used to set an example to others in society as an attempt to lower the overall crime rate and obtain a confession. Most punishments in the 18th century took place in public; torture was an elaborate and shocking practice that was intended to discourage anyone who watched from crime.It was a threat to all criminals and a warning to all citizens, in a day countless amounts of people were tortured to death without a trial or a clear dissertation of their offense. This caused an outrage amongst many members of society who wanted to see change and improvement on a level where issues were approached in a more humanistic manner. Many enlightenment philosophies protested for a more tolerant society, people like Voltaire spoke against the evils of the Justice system and torture until he died.In his writing Scientific Religion he says: â€Å"What horror is this, a secret J udgment a more execrable tyranny than that of spilling blood on a whim without giving the least reason, it is important for everyone that such decisions should be biblically justified† (Brains, 1998) Voltaire biggest issue with torture was the fact that people were not Justified with an explanation for what they had done, they were not given a trial or a chance to defend themselves. It was said that an accused individual would be tortured and if they were indeed not guilty God would save them from their predicament.Torture as a tool of interrogation is not a new phenomenon, in the Greek playwright â€Å"The Frogs† the Aristotelian asked a character which method they should use to torture a slave and he replied: â€Å"In any mode you please pile bricks upon him, stuff his SSE with acid, flay, rack him, hoist him or flog him with a scourge of prickly bristles† (Ramose, Dupes, Zoological, & Careened, 2005) The method of piling bricks on an individual was used to for ce the person into a plea of guilty or not guilty during a felony case.Flaying involved the removal of a portion of the skin from the body, flaying was also used as a method of execution, when a larger portion of skin was removed. The rack was a torture device that consisted of a frame with a roller on both ends the victim was chained by the hands and legs to both ends of the frame ND the rollers were turned which would slowly pull the victim's body in opposite directions causing their Joints to come apart.The process of hoisting an individual consisted of binding the victim's hands and hanging them by a rope attached to their hands causing their shoulder blades to dislocate. Flogging is a method where an individual is struck with a whip tipped with sharp ends meant to tear the victims flesh. The methods that were described in the playwright were used by the Greeks and then adapted and practiced by the 18th century society.A large number of the 18th century torture methods proved to be Just as their cruel abilities, whether they fell victim to torture through their own actions or due to false accusations. Society was no longer running on the basis of obeying the laws to protect everyone but more so obeying to stay alive. Cesar Bacteria spoke out against the corruption of the Justice system, in his essay on crimes and punishment he tries to educate people on the possible alternatives to torture while still for maintaining order and putting crime at bay: â€Å"It is better to prevent crimes that to knish them†¦Do you want to prevent crimes? See to that the laws are clear and simple and that the entire force of the nation is in their defense. See to it that men fear the law and nothing else, the fear of laws is salutary but the fear of men is a fruitful and fatal source of crimes. † (Halls, 1977) Cesar understood that torture would never be the solution to crime and he made it clear in his essay that it was barbaric and outrageous and if there were to be any advancement in the 18th century society torture had to end.From a modern point of view torture is seen as outrageous and inhumane however in the 18th century it was practiced as an attempt to set an example for society and lower the overall crime rate, although the barbarity of these acts reflect poorly on behalf the 18th century society there were still many people who saw torture for its egregious nature and advocated for more tolerant alternatives. Torture was used since the beginning of civilization and then adapted by 18th century Romans however they changed the practice in to something more horrific than it originally was.

Christianity and Islam Essay

During the Post Classical Period, from their respective religious origins to the 1500s, the Christian anti – merchant attitude sharply contrasts with the Islamic pro – merchant attitude towards trade. Both Christianity and Islam’s attitudes gradually became more neutral, more moderate towards the end of the Post – Classical. The sharpest contrast between the views of Christians and Merchants towards trade can be seen during their respective religion’s origins, as exemplified in Documents 1, 2 and 3. Document 1 illustrates the founder of Christianity, Jesus’ negative view towards merchants and trade, along with Document 3 illustrating the early Church’s suspicion and negative attitude towards trade. Document 2 illustrates the founder of Islam, Mohammed’s positive view towards merchants and trade. For example, in Document 1, Jesus, founder of Christianity, proclaims, â€Å"A rich man shall hardly enter into the kingdom of heaven (Doc. 1).† Early on, even from the foundations of Christianity, riches and wealth were deemed incompatible with the Christian ideal, the entrance to the kingdom of heaven. Early Christianity, therefore, viewed trade and riches as inherently evil and exploitive. The official Christian view, coming from it’s authoritative source, the Bible, decrees that the rich man, usually affiliated with the mercantile lifestyle, cannot possibly truly and correctly follow the faith, thus alienating merchants and traders, a harshly anti – merchant, anti – trade paradigm. In accordance with Jesus’ view, St. Godric in Document 3 â€Å"lived sixteen years as a merchant† but gave up his merchant livelihood to â€Å"[take up] the cross as a pilgrim to Jerusalem.† Thus, St. Godric becomes holy by giving up his material, mercantile possessions and instead, becomes a pilgrim to give himself to â€Å"God’s service.† St. Godric, in the Christian tradition is venerated not for his mercantile skills or his keen trading proficiency, but rather for his decision to give himself to God’s service. Thus, the Church, by virtue of canonizing St. Godric, emphasizes the â€Å"hermit† part of his life, much more so than his merchant livelihood.

Biography of Wolfgang Amadeus Mozart. 943 words. His family, childhood, and works are mentioned in this relatively short bio.

Biography of Wolfgang Amadeus Mozart. 943 words. His family, childhood, and works are mentioned in this relatively short bio. Wolfgang Amadeus MozartWolfgang Amadeus Mozart is acknowledged as the greatest natural genius of music. Robert Schumann wrote, "There are things in the world about which nothing can be said, as Mozart's C Major Symphony, much of Shakespeare and pages of Beethoven." (Goulding, 1992, p. 115) Tchaikovsky called Mozart "the music Christ." (Goulding, 1992, p. 116)Mozart was born in Salzburg, Austria on January 27, 1756. His full christened name was Joannes Chrysostomus Wolfgangus Theophilus Mozart. He commonly called himself Wolfgang Amade or Wolfgang Gottliet. His father, Leopold, was a composer, author, and a great violinist in the Archbishop of the Holy Roman Empire's orchestra. He taught him to play the piano at the age of four. By the time Mozart was six, he was a skilled musician.Mozart never had an ordinary childhood. He didn't attend school as most of us would today, but instead, his father taught them at home.The above is regarded by historians as the most ac...He is said to have been very good at mathematics and he could also speak seven different languages! He was lucky enough to visit Vienna in 1762, Paris in 1763, London in 1764, and Italy in 1769 at the age of thirteen. (TopBiography.com, 2001)As a young child in Rome, he wrote out the entire score of a nine-voice religious work after hearing it only twice! He wrote his first symphony at the age of eight, his first oratorio at eleven, and his first opera at the age of twelve. When he was fourteen, he conducted twenty performances of that opera. He was a recognizable person. The Pope decorated him and Empress Maria Theresa took note of him. (TopBiography.com, 2001)When he was fifteen, he entered the service of the Archbishop in Salzburg in a minor capacity and kept that job for about ten years only leaving...

Coordinating vs. Subordinating Conjunctions

Coordinating vs. Subordinating Conjunctions Coordinating vs. Subordinating Conjunctions Coordinating vs. Subordinating Conjunctions By Maeve Maddox When I received not one, but three emails telling me that I’d punctuated a sentence with because incorrectly, I decided I’d better write a post about adverbial clauses of reason. Here’s the example that drew the criticism: Incorrect: The famous author lives in a small town, because she doesn’t like the noise of a big city. †¨ Correct : The famous author lives in a small town because she doesn’t like the noise of a big city. Here are the objections I received: 1. Number five conflicts with my 11th grade English teachers rule.  Separate the two halves of a compound sentence with a comma.  Was she wrong? 2. I disagree with #5.  Two independent clauses should be separated by a comma.She doesnt like the noise of the big city. is an independent clause. Remove the word because and you have two sentences that can stand alone. 3. ERROR.  Ã¢â‚¬Å"she doesn’t like the noise of a big city† is also an independent clause, and the comma is required.  This is a compound sentence with â€Å"because† joining two independent clauses. The readers are perfectly correct about the rule for punctuating a compound sentence. Two independent clauses joined by a coordinating conjunction are separated by a comma: Polio would have stopped a lesser man, but Franklin was determined to follow his cousin into the White House. The conjunctions used to join independent clauses in compound sentences are coordinating conjunctions. The most common coordinating conjunctions are: for, and, nor, but, or, yet, and so. A coordinating conjunction used to join clauses has only one function: it joins clauses of equal importance. Removing the conjunction between two independent clauses will leave two simple sentences whose meanings remain unchanged. They can stand alone as complete sentences. A subordinating conjunction, on the other hand, has two functions: it joins, and it shows a relationship between the clauses that it joins. Removing a subordinating conjunction defeats the purpose for which it exists. The subordinating conjunction because is used to introduce an adverbial clause of cause or reason. The fact that the author doesn’t like the noise of the big city explains why she lives in a small town. Adverbial clauses of reason are also introduced by the subordinating conjunctions since, as long as, as, inasmuch as, insofar as, and due to the fact that. Reminder: When the adverbial clause comes first in the sentence, it is followed by a comma. When the adverbial clause comes after the independent clause, there is (usually) no need for a comma. For example: Since you asked nicely, you may go to the library on Saturday. You may go to the library on Saturday since you asked nicely. Modern business style tends to reject lengthy conjunctions like inasmuch as and due to the fact that. Because, as, and since are the least wordy choices. Some speakers object to using since to introduce a clause of reason because since is also used to introduce clauses of time. Ordinary attentiveness to revision ought to be sufficient to avoid ambiguity with since. Here’s what The Chicago Manual of Style has to say about the objection to causal since: [Since] may relate either to time or to causation. Some writers erroneously believe that the word relates exclusively to time. But the causal since was a part of the English language before Chaucer wrote in the fourteenth century, and it is useful as a slightly milder way of expressing causation than because. But where there is any possibility of confusion with the temporal sense, use because. Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Grammar category, check our popular posts, or choose a related post below:Apply to, Apply for, and Apply withTop 11 Writing Apps for iOS (iPhone and iPad)55 "House" Idioms

3 Types of Compound-Word Errors

3 Types of Compound-Word Errors 3 Types of Compound-Word Errors 3 Types of Compound-Word Errors By Mark Nichol Compound words can easily confuse writers. Compound nouns, for example, are variously styled closed (for example, horseshoe), hyphenated (light-year), and open (â€Å"income tax†). But correctly formatting a noun isn’t the only challenge when it comes to determining whether one word or two is appropriate. This post discusses three classes of errors in usage regarding compounds. First, adverbs such as altogether and prepositions like nevertheless and notwithstanding are often styled â€Å"all together,† â€Å"not withstanding,† and â€Å"never the less,† but although use of these phrases is at least plausible (for example, â€Å"When they were all together, we found that they were more likely to agree†), when they serve as adverbs and prepositions, it is never correct to treat them as separate words. (Yes, all and together are both adverbs, but â€Å"all together† is a sequence of two adverbs, one intensifying the other, not a single adverb.) On the other hand, the following phrases are never correct as one word: alot, alright, eachother, moreso, and nevermind (except, in the latter case, as the title of a certain album). (Alright is in the dictionary, and I’ve used it in this post, but those appearances are merely acknowledgments of its existence, not endorsements.) Everyday, meanwhile, is correct only as an adjective (as in the phrase â€Å"everyday savings†), not standing on its own (the correct treatment is â€Å"You’ll find savings every day†). Then there is a large class of words that, like everyday, are correctly closed in one grammatical form and open in another. For example, when one writes that one plans to work out, the verb phrase is treated correctly. But when describing what one plans to do, one refers to â€Å"doing a workout.† This is true of numerous verb-preposition phrases such as â€Å"log in,† â€Å"break down,† and â€Å"mark up† that become closed compounds when they serve as nouns. Note, however, that there are exceptions, including come-on, in which the compound is hyphenated as shown. (Such exceptions generally persist because of the aversion to having two consecutive vowels in a compound word.) Navigating such vagaries of the English language is annoying, but we are fortunate to have at our disposal dictionaries and other helpful resources. Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Common Mistakes category, check our popular posts, or choose a related post below:50 Idioms About Legs, Feet, and ToesWhat is Dative Case?Epidemic vs. Pandemic vs. Endemic

How do accounts of rural and suburban racism challenge understandings Essay

How do accounts of rural and suburban racism challenge understandings of race and place - Essay Example As a result, there is urgent need to come up with strategies to eliminate or at the very least, reduce cases of racist violence in rural areas. This essay aims at analyzing the various forms of racism in rural and urban areas of the UK, through the eyes of both the whites and the ethnic minorities. The essay also examines the various ways in which such forms of racism can be addressed. 2.0 Rural racism in the English countryside The idea of the English country side for most people is almost fantasy-like, where life is easy-flowing and communities are like â€Å"small nations†. According to Garland & Chakraborti (2006, pp. 161) the rural life of most communities in England is characterized by a quite, cozy life, greenery, close-knit relations among people, and deep feelings of belonging. As a result, the country side is perceived as the place where the â€Å"real† England is represented. Accordingly, there is a common perception that the countryside is a very peaceful pl ace, with no cases of racial segregation and violence. On the contrary, other people coming from other towns and cities, especially ethnic minorities always find it hard to fit into the community life. These minorities are then perceived as unwilling to adopt the English culture, and are subject to racial discrimination. 3.0 Strategies for refiguring rural racism 3.1 Various forms of exclusion In the UK, exclusion can range from differences in skin colour, cultural identity, and economic status. Nonetheless, it seems that racial segregation is the most dominant form of exclusion practiced by most people in the UK today. The main racial categories include White, Black, and Asian. The White category according to Woodward (2004, pp.139) includes the British and the Irish, while the Black category is made up of people from African and Caribbean countries. The Asians are then categorized as being Chinese, Pakistani, or Indian. However, even within the â€Å"White† group, the Engli sh still seem to alienate the Irish and the Welsh. The English seem to have a sense of cultural hegemony, which they believe represents true British nationalism. Therefore, any other ethnic group, especially the Irish is seen as a contaminant of British national identity. The issue of authentic Englishness then comes to the fore of societal structures, and forms a basis for racial segregation. 3.2 Definitions of rurality for indigenous and ethnic minorities, differences Indigenous people and ethnic minorities have very different perception of the term â€Å"rurality†. For most whites, rurality bears the last hope for the preservation of whiteness (Garner 2007, pp.78). The countryside, should, therefore, be protected from the evils of city life, the latter which is characterized by multiculturalism and disorder, represented by ethnic minorities. Accordingly, to a majority of ethnic minorities, life in the countryside is not as smooth, since they constantly have to worry about racial abuse and violence (McKinney 2005, pp. 20). However, cases of violent assault are relatively fewer compared to reported incidents of verbal abuse. It is also alarming to note that the criminal system does not take the victimization of the ethnic minorities seriously, as the former chooses to believe in the â€Å"good† of English people (ibid). As Bonnet (2000b, pp.113 ) noted, English rural dwellers always suspect and treat â€Å"

Canadian Tire Essay Example | Topics and Well Written Essays - 1000 words

Canadian Tire - Essay Example anadas largest retailer, it is asserted that about 90 percent of Canadians live within a 15-minute drive of a Canadian Tire store and that at least 40 percent of Canadians shop at Canadian Tire, which has 487 stores across the country, each owned and operated by an associate dealer. This essay therefore examines the progress that Canadian Tire since its formation. Specifically, the paper explores the company’s achievements, challenges, and weaknesses, further explaining the reason it is my favorite company. As mentioned earlier, the Today Canadian Tire is today a multibillion dollar corporation despite its beginning as a humble and a small company. Having been founded in 1922 by the two brothers, the firm originally operated as a tire store. They two brothers named the company Canadian Tire with the thought that such a name would make it sound big. Strange enough, this strategy worked since currently, almost every town in Canada, regardless its size, has a Canadian Tire store. The first Canadian Tire store became operational in 1934 in Hamilton, Ontario. However, the first Canadian Tire gas station was opened in 1958 during which the company introduced its first Canadian Tire money service. However, the firm would open its first financial services section in 1968. The firm’s progress was evident early since by 1980 the company’ revenues had exceeded the $1 billion mark and its employees had started sharing its profits buying its stock. In 1993, the company recorded huge e xpansion in its operations and revenues leading to the formation of the Canadian Tire Foundation in 1999 to help needy families. Following the expansion of the 1990s was the 2001 opening of most of the firm’s stores seen today (Data Monitor, 2007). However, Canadian Tire continues to grow even in current business environment, which is marred with numerous business issues and challenges. The company, as any other, has faced many challenges over the years in which it has remained in

Communication in Business Report Lab Example | Topics and Well Written Essays - 1000 words

Communication in Business - Lab Report Example These will be elaborated in detail in this report. It is with great concern that Nike is committed to abide entirely with the United Nations Global Compact as guiding principles in all operations of the company. This not only improves the social status of the company but ensures a better working environment that supports innovations and new ways of operations in the company. These are our aims at Nike Company. Compared with Adidas and other competitors, Nike has a more than 47% of market share in sport shoes, though companies such as Adidas produce other products such as Jewelry, the company has a leading market share compared to its competitors. 2.0 Compliance with principles 6 and 8 2.1 Compliance with principle 6 on respect to discrimination and employment Nike is an equal opportunity employer across all its factories. Currently the company has more than 450,000 employees across the globe. This is in addition to thousands others who are indirectly employed by the company. Incident ally among the 450,000 employees, 85% are women (Boje, 1999). The company believes in affirmative action in improving the status of the female workers unlike other companies that have a higher population of males among their employees. In addition, the company is spread in various parts of the glob; in America and Asia and among these factories, Nike employs all races of employees without discrimination. The company to ensure leadership ensures that promotions and appointments in all positions are on a competitive basis disregarding race, gender, religious or any other factor that might be discriminative to employees. The company has put up policies and measures to ensure that it is fully compliant with the Health Code of Conduct and Equal Opportunity Acts and the Occupational Safety and Health Acts that would guide in ensuring a positive working environment (Buckley, 2011). Adidas on the other hand has no scandals relating to poor wages and child labor in overseas markets, and this puts the company much ahead of Nike in customer’s image and perception (Boje, 2001). 2.2 Compliance with policy 8 on environmental responsibility To achieve environmental responsibility, the company has over the time involved experts in analyzing the production process in a review that would enhance improvements in areas where pollution is indicated (Boje, 2009). The company has also initiated policies that would reduce pollution. These include recycling, adoption of greener technologies in the manufacturing process and have in the meantime phased out all PVC plastics in shoes and other products since 1998 (Tamara, 2001). The company has put in place measures and policies and is working towards certification in ISO14000 environmental standards in all the 600 subcontract factories (Tamara, 2001). T

Contract law as practiced in Europe Case Study Example | Topics and Well Written Essays - 1500 words

Contract law as practiced in Europe - Case Study Example The aim of this letter is to examine whether your wife has a chance of getting a favourable settlement in court if she decides to take legal action against you after all. The issue here is whether Penny's case will succeed if brought to court. In other words, will the case find you, Max Power, liable of paying Penny the money that you owe her for support for the past six months This is given the fact that the two of you are still legally married under the Irish Family Law Act 1995 and you having promised to support your wife who is unable to work because of the work place accident that she had five years ago. These are the questions I, as your legal adviser, will be trying to answer in this letter. As to whether Penny's case will succeed if it comes before any Irish family court, I strongly believe that your wife stands a higher chance of convincing the judge to force you to clear the outstanding balance and to continue paying her the monthly allowances. This is if she accuses you on other grounds apart from the current grounds of ostensibly breaking a contract. However, since she has opted to sue you for breaking a contract, I believe that her case does not stand a chance in a court of law in England. This is because there is no legal document that exists showing that the two of you entered in any form of contract. ... 3 In June 2008, you left for Dubai and left your wife alone at home 4 You verbally agreed to pay Penny support allowances of $1500 verbally and you did so for six months 5 In January 2009, you met Stacey Floodgates and soon took her in as your partner 6 Since January 2009, you defaulted on paying Penny her monthly allowances 7 Five years ago, Penny had an accident which left her unable to work, and so she had been relying on her husband's support payments for upkeep 8 The reason why Penny is suing you is because she believes that the contract between the two of you, though verbal, was binding Rule Statement and Rule Synthesis For a contract to be binding under the European code of conduct, there are some requirements that it has to meet. These are generally referred to as "the three c's" (Gordley, 2008). The first is the cause, whereby a reason should have emerged that required for the drafting of the contract (Gordley, 2008). The second is consideration. This is whereby the two parties must have identified the form of contract that is best to enter into to given their circumstances. The third and most important aspect of a contract in our case here is the consent (Gordley, 2008). This is an indication that the parties went through the contract and agreed to abide by the terms provided for there. This consent is indicated in form of a signature that is appended by both parties in the contract. Without a signature, leave alone without the written document, the contract is null and void, and nobody can be accused of breaching it. The only exception whereby an actual signature is not needed on the document is when the contract is done online (Orlando, 2009). But even these form of contracts, under the Irish law that governs electronic contracts,

Supply Chain Management Essay Example | Topics and Well Written Essays - 2250 words - 2

Supply Chain Management - Essay Example n that health care units are normally used by upper class people of high income groups (HIG) who are health conscious and wish to remain fit and trim. It could be used by children, adolescents, men and women and also elderly people. In the case of prospective location, Newcastle in UK, it is seen that percentage population above age of 60 years is 18.7%. Again, children within 18 years constitute 18.3% of the population. (Newcastle upon tyne central 2007). It is seen that in the context of current competitors’ charges, in most cases the prices are more or less equal for fitness services rendered, through use of machines or physical training, swimming pools, etc. Coming now to the second part of the question, it could be said that the main duty of a Geographical Information System (GIS) is to store, analyze, manage and present data which is connected with location. â€Å"Geography plays a role in nearly every decision we make. Choosing sites, targeting market segments, planning distribution networks, responding to emergencies, or redrawing country boundaries—all of these problems involve questions of geography.† (What is GIS). It is necessary that information needs to be associated with locations. Thus the latter plays a very determinant part in business strategy for bonding with customers or setting new plants. Again it is seen that Choosing a site, targeting a market segment, planning a distribution network, zoning a neighbourhood, allocating resources, and responding to emergencies—all these problems involve questions of geography. (Geography matters 2008). It is believed that retail business of the kind carried out by Tesco could greatly benefit by GIS. â€Å"Businesses maintain information about sales, customers, inventory, demographic profiles, and mailing lists, all of which have geographic locations. Therefore, business managers, marketing strategists, financial analysts, and professional planners increasingly rely on GIS to organize, analyze,

Contract law as practiced in Europe Case Study Example | Topics and Well Written Essays - 1500 words

Contract law as practiced in Europe - Case Study Example The aim of this letter is to examine whether your wife has a chance of getting a favourable settlement in court if she decides to take legal action against you after all. The issue here is whether Penny's case will succeed if brought to court. In other words, will the case find you, Max Power, liable of paying Penny the money that you owe her for support for the past six months This is given the fact that the two of you are still legally married under the Irish Family Law Act 1995 and you having promised to support your wife who is unable to work because of the work place accident that she had five years ago. These are the questions I, as your legal adviser, will be trying to answer in this letter. As to whether Penny's case will succeed if it comes before any Irish family court, I strongly believe that your wife stands a higher chance of convincing the judge to force you to clear the outstanding balance and to continue paying her the monthly allowances. This is if she accuses you on other grounds apart from the current grounds of ostensibly breaking a contract. However, since she has opted to sue you for breaking a contract, I believe that her case does not stand a chance in a court of law in England. This is because there is no legal document that exists showing that the two of you entered in any form of contract. ... 3 In June 2008, you left for Dubai and left your wife alone at home 4 You verbally agreed to pay Penny support allowances of $1500 verbally and you did so for six months 5 In January 2009, you met Stacey Floodgates and soon took her in as your partner 6 Since January 2009, you defaulted on paying Penny her monthly allowances 7 Five years ago, Penny had an accident which left her unable to work, and so she had been relying on her husband's support payments for upkeep 8 The reason why Penny is suing you is because she believes that the contract between the two of you, though verbal, was binding Rule Statement and Rule Synthesis For a contract to be binding under the European code of conduct, there are some requirements that it has to meet. These are generally referred to as "the three c's" (Gordley, 2008). The first is the cause, whereby a reason should have emerged that required for the drafting of the contract (Gordley, 2008). The second is consideration. This is whereby the two parties must have identified the form of contract that is best to enter into to given their circumstances. The third and most important aspect of a contract in our case here is the consent (Gordley, 2008). This is an indication that the parties went through the contract and agreed to abide by the terms provided for there. This consent is indicated in form of a signature that is appended by both parties in the contract. Without a signature, leave alone without the written document, the contract is null and void, and nobody can be accused of breaching it. The only exception whereby an actual signature is not needed on the document is when the contract is done online (Orlando, 2009). But even these form of contracts, under the Irish law that governs electronic contracts,

Literary Criticism of Edna St Vincent Millay Research Paper

Literary Criticism of Edna St Vincent Millay - Research Paper Example The poem appears straight-forward, however, the words seem to have greater meaning than one can comprehend easily. Moreover, St. Edna experiments in this poem by giving it a title, â€Å"Love is not all†: This gives the poem its tone. From a mere point of view, one may think that this poem describes a person suffering from depression of love by asserting that love cannot assist a person in times of difficulty. However, in the middle of the poem, St. Edna posits that Love is basically not adequate to live with and one may even sell it during periods of difficulties. In the last stanza of this poem, St. Edna says that she does not think she would sell her lover; this gives its readers the idea that some people may sell their love for material things such as food, while others may not. Another strategy employed by St. Edna to explicate the theme of love in her work is through application of a simple approach, though not simplistic. Her works i.e. â€Å"Love is not all†, leaves its audiences doubtless. This is facilitated through her simple ways of communication, basically ensuring that her works are enjoyed and appreciated. Taking an analysis of â€Å"love is not all†, St. Edna does not appear to take one decisive stand; that is, she does not encourage men and women to lose all their material and emotional possession in the name of love. Some critics have asserted that â€Å"Love is not all†, by St. Edna is basically a timeless statement in the sense that love cannot provide one with food and shelter (Maduxx et al, 11). On the other hand, some critics have asserted that St. Edna’s work are simple merely because they do not appear as if they are politically instigated or meant to achieve certain political objectives (Milford et al, 6). St. Edna was considered one of the traditional poets that were heavily disturbed by the existence of death as well as the idea of dying. In this regard, she has placed emphasis on wordplay as well

Amusement Park Industry Essay Example for Free

Amusement Park Industry Essay †¢ The amusement industry in India is at a growing stage currently with more and more developments happening in this industry all across the country. †¢ The size of the Indian Amusement Park business is estimated to be around Rs 4000 crores and is estimated to grow by 10% per cent per annum till 2010. †¢ The amusement and theme park industry is deemed to be worth Rs. 10000 crores in India by 2020. Janaki Rao. U Analyst Equity Research Desk [emailprotected] com †¢ Currently for a population of 1. 15 billion in the country, there are only 120 amusement parks and 45 Family Entertainment Centers. This indicates that the growth potential of Indian amusement and theme park industry is substantial. †¢ Global leaders in entertainment parks and attractions like Universal Studios, Disney, Sony and Ripley Entertainment are mulling over investments of billions of dollars in India considering the vast potential in this region. Private equity funds are also aggressively dedicating resources towards this sector. †¢ The Indian small and big players in the Amusement Industry are looking at the tremendous growth potential of this industry in the next 5 years. †¢ Growth of Indias retail sector had been the main driving force for the amusement industry in India. †¢ Globally, domestic and international tourists comprise more than 50% of the total footfall at popular amusement parks. †¢ Transport corridors like expressways and the Metro line are bringing an increasing number of people closer to entertainment hubs. †¢ The high growth potential of the industry in highly populated India will boost tourism, social infrastructural development as well as employment generation. The success and growth potential of this industry is resulting into the advent of new manufacturers of amusement parks rides in India. V. S. R. Sastry Vice President Equity Research Desk 91-22-25276077 [emailprotected] com Dr. V. V. L. N. Sastry Ph. D. Chief Research Officer [emailprotected] com 1 22nd May, 2010 CONTENTS 1. Sector Overview 2. Current Trends 3. Profile of top three Indian Companies 4. SWOT Analysis 5. Conclusion 2 22nd May, 2010 1. Sector Overview Structure Development The amusement and theme park industry in India is about two decades old and it is relatively new when compared to its origin in USA Europe. This industry found its roots in India during mid and late 1980s when a few innovative entrepreneurs took challenge of pioneering few amusement parks in Delhi, Kolkata, Mumbai and Chennai. The growth in this industry started only in the last decade and that happened possibly during the advent of globalization when economic potential of the social capital began to be perceived. A recent market survey research shows that this industry in India is growing at a rapid pace and over 120 amusement parks and water parks are currently in operation in India. Out of them only 15% can be classified in the large parks category, 30% as medium size parks and balance 55% are small size local parks. Investments to the tune of Rs 10,000 crore are likely to flow into the domestic amusement and leisure sector by 2020 with about 500 new parks are expected to come up across the country. The Rs 4,000-crore Indian amusement and leisure industry expects fresh investment of Rs 10,000 crore by the year 2020. In terms of employment generation, the new parks are likely to create jobs for six crore man-hours per month. It is estimated that the total capital investment made in the amusement and theme park industry in India till date, is more than INR 40 billion (excluding investment on land). The estimated annual revenue generated by this industry is approx INR 20 billion, at present, which is expected to grow to almost three times by the year 2020 at a CAGR of over 11%. 3 22nd May, 2010 Amusement Parks are recreational facilities that offer a varied range of entertainment options ranging from theme parks to spine chilling roller coaster, 3D theater to giant wheel, in a cluster format. These parks provide one-stop-shop leisure and entertainment solutions for the entire family at one place and are a key source of tourist attraction (domestic and foreign) and revenue generation for the State. The demand for entertainment options such as amusement parks, I-max, shopping malls are rapidly increasing across the Country. The key demand drivers for the segments are rising base of middle class, increasing disposable income, changing lifestyle, cultural shift and increasing emphasis to lead a holistic life with a balance of work and leisure. Tourism- Amusement parks. During the last decade domestic tourism had grown @ 14% on an average and currently it is estimated at 527 million. Out of this, the amusement park industry generated only 15 million footfall during last year. Globally, domestic and international tourists comprise more than 50% of the total footfall at popular amusement parks. We can, therefore, expect that there would be manifold increase in footfall in amusement parks in India as the large parks in India are gradually converting themselves to larger destination parks with additional investments following the foot steps of large global parks. Currently for a population of 1. 1 billion in the country, there are only 120 amusement parks and 45 Family Entertainment Centres. This indicates that the growth potential of Indian amusement and theme park industry is substantial. The high growth potential of the industry in highly populated India will boost tourism, social infrastructural development as well as employment generation. The success and growth potential of this industry is resulting into the advent of new manufacturers of amusement parks rides in India. 4 22nd May, 2010. Today, Indian manufacturers can produce international standard quality products at a competitive price for both the domestic and the global market. Both these areas have good potential. Amusement parks have not received their due recognition for their enormous potential as an infrastructural facility for tourism. The amusement industry worldwide is a very significant part of the tourism effort. In India, the tourism policy does not address the needs and the potential of the amusement industry. As such, today the amusement industry in India receives no special incentives. Recreation Industry Amusement parks Recreation Industry is currently one of the most exciting sectors in India. The current market for leisure is estimated to cross USD 1 bn in next few years. The leisure industry mainly consist of amusement park, malls family entertainment centers (FECs) and multiplexes. The present consumer base is estimated around 30 million people. At present there are around 200 FECs in the Country and the number is expected to grow to 400 in the next couple of years. Amusement parks contribute nearly 40% of the total leisure industry turnover. Through the years though there is a healthy growth, but at the same time it is burdened by local entertainment tax ranging from 10 to 25 per cent in various states. Further if any imposition of Central Tax like Service Tax will cripple the whole industry. The industry can absorb either of the taxes and not both, he stated. Further he urged to make amusement industry an integral part of tourism and development in India at the Central Government Level. Recreation Industry is currently one of the most exciting sectors in India. The current market for leisure is estimated to cross USD 1 bn in next few years. The leisure industry mainly consist of amusement park, malls family entertainment centers (FECs) and multiplexes. The present consumer base is estimated around 30 million people. 5 22nd May, 2010 At present there are around 200 FECs in the Country and the number is expected to grow to 400 in the next couple of years. Amusement parks contribute nearly 40% of the total leisure industry turnover. Retail- Amusement parks Growth of Indias retail sector had been the main driving force for the amusement industry in India. Famous Ten Amusement parks in India: 1. Veegaland Park Situated at Pallikkara, this state of art Amusement Park is just 14kms away from Kochi/Cochin. Spread over a whooping 24 acres of land, its 7 storey high Vintage Castle and Caterpillar Village give a Fairy Tale atmosphere. The musical Fountains, flower gardens, water pool and water slides add to the attraction of the Veegaland Amusement Park. 6 22nd May, 2010 2. Ocean Park Ocean Park is situated at Gandipet, 20 km. from Hyderabad, in 20 acres of landscaped gardens, an amusement park that you havent seen the likes of yet in India. It is one of the first theme parks started in twin-cities and continues to be a great hit especially with children. But it is not the young ones alone who enjoy, even adults can have lots of fun here. It is a family amusement park offering a good mix of fun and thrills for people of all ages with water rideskiddies pool, wave pool, water slides, dry rides- super loop, the 60 feet high ride, bumping cars, slam bomb etc. . 7 22nd May, 2010 3. Ramoji Film City Ramoji Film City is the ultimate leisure destination for holidays, honeymooners, corporate conferences, events, theme parties, adventure camps, family picnics and grand weddings. this world s largest integrated film studio complex spread over 2000 acres of land. It was opened by the Film Producer Ramoji Rao in the year 1996. It’s about 25 kms from the main city of Hyderabad and is open the 7 days of a week. The Film City Complex has urban landscapes of US and Australia as well as India. They have the Amazon Army Base as the newest additions to the attractions of the Film City. 8 22nd May, 2010 4. Fun n food Village Fun N Food Village at Delhi was set up in the year 1993. Fun N Food Village is situated at Old Delhi-Gurgaon Highway which is just 3 kilometers away from the Delhi international airport. Fun N Food Village is for all ages of people. Fun N Food Village in Delhi was inaugurated by former President of India Giani Zail Singh. 9 22nd May, 2010 5. Essel World Pan India Paryatan Pvt. Ltd. (PIPPL) is the company holding EsselWorld – India’s Largest Amusement Park and Water Kingdom – Asia’s Largest Theme Water Park. Pioneers in the entertainment and leisure industry, it was EsselWorld that pulled people out of the staid environment of conventional pleasure trips and unfolded before them the exciting new scenario of a complete leisure destination. A sprawling complex on the coastal Gorai village in northwest Mumbai, â€Å"The Island of Fun† is sprawled over 64 acres and is a refreshing gateway to a whole new world of excitement and fun. The second phase in the expansion plans for PIPPL, Water Kingdom makes this twin park complex a complete destination by itself. It’s never-before seen attractions set amidst unique architecture with international standard amenities and hygiene; catapult Water Kingdom into a different league. It is the only, truly international water park experience in India. 10 22nd May, 2010 6. Adventure Island Sprawling over an area of 62 acres in North West Delhi, it has been made with the venture of Unitech Ltd and International Amusement Ltd. It’s a 164 crore project with a water park and Planet Pogo. There are 26 rides in all and all of them have been imported supplied by leading European manufacturers such as Intamin, Moser and Zamperla, who supply rides to Disney, Universal Studios and Six Flags. The park is especially popular amongst children and teenagers. The entire Island consists of world class amusement Park, an adventure island and a water park. Retail Environment Metro Walk (Delhi) is spread across 2. 21 lakh sq ft and is anchored to the park. It overlooks a large lake which acts as a separator between the mall and the park. The Park has 26 rides spreading in an area of 3. 5acres. 7. Entertainment City It is thought of as Disney Land of India the Entertainment City in Noida. Unveiled by former cricket captain and entrepreneur Kapil Dev, it spreads over a whooping 147 acre land with an investment of Rs 10 billion. Built over an area of 100 acres of land, the park has more then 30 rides, supplied from European manufacturers. The Entertainment City Park has three entertainment zones, one for kids, one for teenagers and one for families each with its own separate rides, attractions and food courts. In addition to this it also has a Shopping complex known as the Great IndiaThe Entertainment City is a is a joint venture between Unitech and International Amusement Limited, the promoters of Appu Ghar (Delhi). 11 22nd May, 2010 8. Nicco Park It is situated in the heart of the main City of Calcutta in Salt Lake its one of the most happening place for the kids and teenagers. The elders simply love to be here. Covering an area of 40 acres, it was opened in the year 1991. Jheel Meel was the previous name of the park. It was renamed in the year 1990 with the restructuring of the park. It’s the only Amusing Park in the world which has got ISO 9002 certification. It draws a whopping 1. 5 million people every year. 9. Gujarat Science City Gujarat Science City has been made with a view of imparting education in the form of entertainment. On one of its side, it has small village while on other side the suburban urban area reflects technological atmosphere. The Gujarat Science City has something different from others in the country. Visited by the former Indian President and Scientist Dr. J P Abdul Kalam it exhibits, mind blowing experience, models which can be worked upon, a showcase of virtual reality, activity corners, hands on labs and live demonstrations to provide an understanding of science and technology to the common man. 10. Platinum Resorts The silent yet beautiful theme park of West Delhi is spreading at 14 acres of land. Big lawns here and the greenery calls people to view the scenery beauty amongst the screaming voice of the city lights. It’s a Resort cum Water Park. The beauty of the Park can be seen from the entrance itself. It has a huge big entrance with the hugeness it looks more magnificent. The Platinum Resort is just a 30 minutes drive (25 km drive from Paschim Vihar, on Delhi-Rohtak Road, NH no. 10. It’s a good place for family gatherings, parties and of course the entertainment of the entire family. 12 22nd May, 2010 13 22nd May, 2010 Current trends Amusement parks seek uniform entertainment tax The Indian Association of Amusement Parks and Industries, apex body of the amusement parks, has sought uniformity in the entertainment tax being imposed by different states. The Association rues that the exorbitantly charged entertainment tax by some states is a major impediment in the growth of the industry in these regions. â€Å"West Bengal, Punjab and Gujarat charge entertainment tax at 20%, 40% and 25% respectively, whereas the entertainment tax rate hovers around 5-15% in majority of the states. Real Estate companies plans to enter into this market Though the unorganised players hold a majority share in the market, the organised players are also expanding their base. Groups like Nicco Parks, Zee group, Unitech Turner and various real estate companies are developing amusement parks in different regions. The foreign developers are also stepping into the Indian amusement industry through collaborations with Indian companies. 14 22nd May, 2010 V Guard group entered into amusement parks V Guard Group of companies, based in Cochin in Kerala, is negotiating with property owners in Mumbai and Chennai for starting amusement parks. The group, which is running Veegaland in Cochin and Wonderla near Bangalore, has identified a place near Chennai to start a watertheme and amusement park, but negotiations were still on. Growing transportation facilities. Transport corridors like expressways and the Metro line are bringing an increasing number of people closer to entertainment hubs. To that extent, they trigger growth of formal means of entertainment. One major development witnessed in National Capital Region (NCR) over the last 4-5 years has been the expansion of Delhi Metro line. This process started in Central and Western parts of the city and is now on course to link South Delhi and Gurgaon. This has provided common man with a mode of transport that is both economical and convenient. While daily journeys like the ones to college or workplace have been simplified the occasional weekend outing too has been made much simpler as a result of enhanced connectivity to popular entertainment destinations. 15 22nd May, 2010 Expansion of Metro rail project One of the first entertainment destinations, which is strategically located near Rohini Metro Station, was launched by Unitech. This project was launched prior to the completion of the Metro line and has been fully operational since December 2007. It comprises Adventure Island an amusement park and the Metro Walk MallThe expansion of Delhi Metro gives us reason to be very optimistic about future of our projects in Rohini, especially Adventure Island. While the city is dotted with malls and retail spaces this is one of the few amusement parks and hence we expect a significant increase in footfalls upon extension of Metro line to South Delhi and Gurgaon, as distance will no longer be a prime consideration. Profile of top three Indian Companies: 1. Nicco parks resorts ltd. NPRL was incorporated with the prime objective of providing educative entertainment and wholesome recreation for the entire family simultaneously promoting tourism. NPRL presents a complete leisure package in an eco-friendly atmosphere with thrilling rides, eateries, exclusive landscaping, and indoor sports. This amusement park offers all kinds of entertainment under one roof and handles its offerings with professional elan. Business area of the company: At Nicco Park, it offers a wide range of rides and facilities, which the company manufactures in addition to setting up the operation of Amusement or Water Parks on turnkey basis. 16 22nd May, 2010 The company is associated with TUV, India (affiliated to TUEV, Germany) who commission an annual inspection of all its major rides along with manufacturing inspections for the new rides based on approved quality assurance plans. The company can offer overall consultancy to set-up and run Theme Parks successfully. †¢ At the market price of Rs. 70. 00, the stock trades at P/E of 15. 35 x and 12. 96 xs for the earnings of FY10E and FY11E respectively. †¢ Earning per share (EPS) of the company for the earnings of FY10E and FY11E is seen at Rs. 4. 56 and Rs. 5. 40 respectively for equity share of Rs. 10. 00 each. †¢ We recommend ‘BUY’ in this particular scrip with a target price of Rs. 85. 00 for Medium to Long term investment. Particulars Net Sales (Rs. Mn. ) Net Profit (Rs. Mn. ) EPS (Rs. ) FY08 214. 80 12. 80 2. 73 FY09 244. 00 21. 30 4. 56 % Chg. YoY 13. 59 66. 41 67. 03 17 22nd May, 2010 2. South Asian Enterprises Ltd South Asian Enterprises (SAENTER) is engaged in the business of setting up and running amusement parks and has ventured into the real estate and films. It was incorporated on Mar. 21, 1990 and came out with a public issue on Mar. 30, 1994. Earlier known as South Asian Entertainment, it acquired its present name on Feb. 24, 1995. Associate companies include VLS Capital, Gaurav Overseas Exports, Needle Eye Plastic Industries, Pragati Moulders, M. P. Mehrotra (HUF), VLS Finance, VLS Securities, VLS Investments, VLS Asset Management, and VLS Investments Inc. (USA). The first park was set up in the city of Kanpur under the name and style of Mikky House. Other parks were set up in Lucknow and Ayodhya. In FY08, the company ventured into marketing of earthing products and execution of contracts for earthing and lightning protection systems. It has also ventured into television serials and film production in collaboration with AUM Sportainment. Come December is a recent production. †¢ At the market price of Rs. 12. 06, the stock trades at P/E of -0. 14 x and 22. 59 xs for the earnings of FY10E and FY11E respectively. †¢ Earning per share (EPS) of the company for the earnings of FY10E and FY11E is seen at Rs. -0. 54 and Rs. 0. 53 respectively for equity share of Rs. 10. 00 each. †¢ We recommend ‘HOLD’ in this particular scrip with a target price of Rs. 20. 00 for Medium to Long term investment. 18 22nd May, 2010 Particulars FY09 FY10E % Chg. YoY Net Sales (Rs.Mn. ) Net Profit (Rs. Mn. ) EPS (Rs. ) 7. 40 1. 87 0. 47 13. 03 -0. 54 76. 08 3. Mahindra Holidays Resorts India Ltd Mahindra Holidays Resorts India Limited was incorporated as a private limited company called ‘Mahindra Holidays Resorts India Private Limited’ on September 20, 1996. The status of the Company was changed to a public limited company by a special resolution of the members passed at the annual general meeting held on January 29, 1998. The fresh certificate of incorporation consequent upon conversion was issued to the Company on April 17, 1998, by the Registrar of Companies, Tamil Nadu at Chennai. †¢ At the market price of Rs. 482. 00, the stock trades at P/E of 30. 72 x and 27. 92 x for the earnings of FY10E and FY11E respectively. †¢ Earning per share (EPS) of the company for the earnings of FY10E and FY11E is seen at Rs. 15. 69 and Rs. 17. 25 respectively for equity share of Rs. 10. 00 each. †¢ We recommend ‘BUY’ in this particular scrip with a target price of Rs. 575. 00 for Medium to Long term investment. 19 22nd May, 2010 Particulars Net Sales (Rs. Mn. ) Net Profit (Rs. Mn. ) EPS (Rs. ) FY10 5101. 96 1178. 37 14. 44 FY11E 5694. 23 1307. 23 15. 69 % Chg. YoY 11. 61 10. 94 8. 66. SWOT Analysis Strengths †¢ Fastest growing sector †¢ High margins †¢ Growing foreign Investments †¢ Customers satisfaction Weaknesses †¢ Seasonal business †¢ Low entry fees †¢ No special incentives from govt 20 22nd May, 2010 Opportunities †¢ Currently for a population of 1. 15 billion in the country, there are only 120 amusement parks and 45 Family Entertainment Centers. This indicates that the growth potential of Indian amusement and theme park industry is substantial. †¢ Transport corridors like expressways and the Metro line are bringing an increasing number of people closer to entertainment hubs. †¢ The Indian gaming market is on the path of maturity, income levels are rising and people want to have a fun life. †¢ The foreign companies reportedly interested in the Indian amusement parks market include Universal Studios, Time Warner and Disney. †¢ Growing tourism industry †¢ Growing retail market Threats/ Challenges †¢ Factors such as monsoon and cold weather affect the industry and in a year, only 100 days are the peak season for the parks. †¢ Lack of uniform taxation †¢ Govt policies †¢ Rising material cost of equipment 21 22nd May, 2010. Conclusion: The high growth potential of the industry in highly populated India will boost tourism, social infrastructural development as well as employment generation. The success and growth potential of this industry is resulting into the advent of new manufacturers of amusement parks rides in India. Currently for a population of 1. 15 billion in the country, there are only 120 amusement parks and 45 Family Entertainment Centers. This indicates that the growth potential of Indian amusement and theme park industry is substantial. Global leaders in entertainment parks and attractions like Universal Studios, Disney, Sony and Ripley Entertainment are mulling over investments of billions of dollars in India considering the vast potential in this region. Private equity funds are also aggressively dedicating resources towards this sector. The growth of the Indian economy will drive the Industry to, â€Å"grow both vertically horizontally. Vertically, in terms of the scale of investment and horizontally across the length and the breadth of the country. The greatest growth potential is the enormous amount of dormant/under-utilised land in India’s hinterland. Hotels and resorts are already showing interest in developing existing plots into anything form small play areas to full scale theme or water parks. _______________________________________________________ Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but we do not represent that it is accurate or complete and it should not be relied on as such . Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. 22 22nd May, 2010 Firstcall India Equity Research: Email – [emailprotected] com B. Harikrishna Banking B. Prathap IT A. Rajesh Babu FMCG C. V. S. L. Kameswari Pharma U. Janaki Rao Capital Goods E. Swethalatha Oil Gas D. Ashakirankumar Automobile Kavita Singh Diversified Nimesh Gada Diversified Priya Shetty Diversified Tarang Pawar Diversified Firstcall India also provides Firstcall India Equity Advisors Pvt. Ltd focuses on, IPO’s, QIP’s, F. P. O’s, Takeover Offers, Offer for Sale and Buy Back Offerings. Corporate Finance Offerings include Foreign Currency Loan Syndications, Placement of Equity / Debt with multilateral organizations, Short Term Funds Management Debt Equity, Working Capital Limits, Equity Debt Syndications and Structured Deals. 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Net Present Value is the most realistic technique for evaluation

Net Present Value is the most realistic technique for evaluation Introduction Drury (2000) stated, The theory of capital budgeting reconciles the goals of survival and profitability by assuming that management takes as its goal the maximization of the market value of the shareholders wealth via the maximization of the market value of ordinary share. Capital budgeting decisions may be defined as the firms decision to invest its current funds most efficiently in the long term assets in anticipation of an expected flow benefits over a series of years. (Pandy, 2005) According to the above definitions of capital budgeting, following features can be identified, I. Exchange current funds for future benefits II. Funds are invested in long term assets and III. Benefit will occur to the firm over a series of years. Therefore main objective of the capital budgeting decisions are to maximize the wealth of the shareholders by, à ¢Ã¢â€š ¬Ã‚ ¢ Determining which specific investment projects to be undertaken à ¢Ã¢â€š ¬Ã‚ ¢ Determining the total amount of capital expenditure which the firm should be obtained à ¢Ã¢â€š ¬Ã‚ ¢ Determining how this portfolio of projects should be financed. In capital budgeting process different investment appraisal techniques are used to evaluate the investments. They are mainly traditional and Discounting Factor (DCF) methods. In traditional method consist of Payback and Accounting Rate of Return (ARR) which dont have the time value adjustment. But in DCF method Net Present Value (NPV) and Internal Rate of Return (IRR) are included and they are adjusting the time value of money to the cash flows. These techniques give different benefits and limitations in investment evaluation process, although as per the theoretical view DCF analysis may give more benefit to the organization. However successful completion of a project mainly depends on the selection criteria adopted while choosing the project in the initial phases itself and the choice of a project must be based on a sound financial assessment and not based on impression. DCF techniques are being widely used in both public and private sector. This is the method recommended for evaluating investment proposals. In this method, the incremental cost and benefits of proposals are discounted by a required rate of return in order to obtain the net present value of the proposal. Investment decisions are essential for a business as they define the future survival, and growth of the organization. The main objective of a business being the maximization of shareholders wealth. Therefore a firm needs to invest in every project that is worth more than the costs. The Net Present value is the difference between the projects value and its costs. Thus to make shareholders happy, a firm must invest in projects with positive NPVs. We shall start this essay with an explanation of investment appraisal, NPV, then compare this method with other investment appraisal methods and finally try to define, based on the works of Tony Davies, Brian Pain, and Brealey/Myers/Allen, which method works best in order to define a good investments. What is Investment Appraisal? A means of assessing whether an investment project is worthwhile or not Investment project could be the purchase of a new PC for a small firm, a new piece of equipment in a manufacturing plant, a whole new factory, etc Used in both public and private sector Types of investment appraisal: Payback Period Accounting Rate of Return (ARR) Internal Rate of Return (IRR) Profitability Index Net Present Value (discounted cash flow) Why do companies invest? Importance of remembering investment as the purchase of productive capacity NOT buying stocks and shares or investing in a bank! Buy equipment/machinery or build new plant to: Increase capacity (amount that can be produced) which means: Demand can be met and this generates sales revenue Increased efficiency and productivity Investment therefore assumes that the investment will yield future income streams Investment appraisal is all about assessing these income streams against the cost of the investment Capital budgeting versus current expenditures A capital investment project can be distinguished from current expenditures by two features: a) Such projects are relatively large b) a significant period of time (more than one year) elapses between the investment outlay and the receipt of the benefits. As a result, most medium-sized and large organizations have developed special procedures and methods for dealing with these decisions. A systematic approach to capital budgeting implies: a) The formulation of long-term goals b) The creative search for and identification of new investment opportunities c) Classification of projects and recognition of economically and/or statistically dependent proposals d) The estimation and forecasting of current and future cash flows e) A suitable administrative framework capable of transferring the required information to the decision level f) The controlling of expenditures and careful monitoring of crucial aspects of project execution g) A set of decision rules which can differentiate acceptable from unacceptable alternatives is required. The classification of investment projects a) By project size Small projects may be approved by departmental managers. More careful analysis and Board of Directors approval is needed for large projects of, say, half a million dollars or more. b) By type of benefit to the firm  · An increase in cash flow  · A decrease in risk  · an indirect benefit (showers for workers, etc). c) By degree of dependence  · Mutually exclusive projects (can execute project A or B, but not both)  · complementary projects: taking project A increases the cash flow of project B.  · substitute projects: taking project A decreases the cash flow of project B. d) By degree of statistical dependence  · Positive dependence  · Negative dependence  · Statistical independence. e) By type of cash flow  · Conventional cash flow: only one change in the cash flow sign e.g. -/++++ or +/-, etc  · Non-conventional cash flows: more than one change in the cash flow sign, e.g. +/-/+++ or -/+/-/++++, etc. Brief Introduction to Discounted Cash Flow and Methods This section would give a briefing on the mentioned topic and explain them thoroughly later on in this report. Discounted cash flow (DCF) DCF focuses on the time value of money, Rs.1 is worth more today than Rs.1 in the future. The reason being that it could be invested and make a return (yes, even in times of low interest, so long as interest rates are positive). So thats the discounting methodology, DCF has two methods. Net Present Value (NPV) The annual cash flows are discounted and totaled and then the initial capital cost of the project is deducted. The excess or deficit is the NPV of the project, it goes without saying that for the project to be worthwhile the NPV must be positive and the higher the NPV the more attractive is the investment in the project Internal Rate of Return (IRR) The IRR or yield of a project is the rate of return at which the present value of the net cash inflows equals the initial cost, which is the same as the discount rate which produces a NPV of zero. For an investment to be worthwhile the IRR must be greater than the cost of capital. Due to the following reasons, DCF method is identified as a best method for Investment appraisal processes, à ¢Ã¢â€š ¬Ã‚ ¢ They give due weight to timing and size of cash flow à ¢Ã¢â€š ¬Ã‚ ¢ Thy take the whole life of the project in to irregular cash flows do not invalidate the result obtained. à ¢Ã¢â€š ¬Ã‚ ¢ Estimate of risk and uncertainty can be incorporated à ¢Ã¢â€š ¬Ã‚ ¢ Use of discounting methods may lead to move accurate estimating and à ¢Ã¢â€š ¬Ã‚ ¢ They rank projects correctly in order of profitability and give better criteria for acceptance or rejection of projects than other method. Because of that in theoretically said that DCF analysis is best method to evaluate the investment over its rivals. A survey carried out by the Arnold Hatzopolous (2000) and Graham Harvey (2000) to identify the practical usage of investment appraisal techniques among the large manufacturing firms of UK had revealed that NPV and IRR are less behind its rivals in practically. Therefore they have commented that there is a gap between usages of appraisal techniques in practically and theoretically. The economic evaluation of investment proposals The analysis stipulates a decision rule for: I) accepting or II) rejecting Investment projects The time value of money Recall that the interaction of lenders with borrowers sets an equilibrium rate of interest. Borrowing is only worthwhile if the return on the loan exceeds the cost of the borrowed funds. Lending is only worthwhile if the return is at least equal to that which can be obtained from alternative opportunities in the same risk class. The interest rate received by the lender is made up of: The time value of money: the receipt of money is preferred sooner rather than later. Money can be used to earn more money. The earlier the money is received, the greater the potential for increasing wealth. Thus, to forego the use of money, you must get some compensation. The risk of the capital sum not being repaid. This uncertainty requires a premium as a hedge against the risk; hence the return must be commensurate with the risk being undertaken. Inflation: money may lose its purchasing power over time. The lender must be compensated for the declining spending/purchasing power of money. If the lender receives no compensation, he/she will be worse off when the loan is repaid than at the time of lending the money. Internal Rate of Return The internal rate of return (IRR) is another widely used method of investment appraisal. It calculates the rate of return, where the difference between the present values of cash inflows and outflows, the NPV, is zero. Thus when would a company undertake the project? Simply when the expected rate of return, the IRR, exceeds the target rate of return of the company. This is called the IRR rule. When the IRR is superior to the target rate of return, the NPV is positive. When IRR is equal to the target rate of return then NPV is equal to 0, and when the IRR is inferior to the target rate of return, then the NPV is negative. IRR can easily be determined through interpolation, which assumes a linear relationship between the NPVs of a capital investment project obtained using different discount rates. The exact rate is calculated algebraically using the theorem of Thales. we would have to compute a complex weighted average of these rates to be able to compare it to the IRR. This very much complicates the task, and gives us yet another reason to stick to the simple NPV method to better appraise investments. It has been shown that NPV proves to be much more reliable and simple of use than IRR. IRR is indeed subject to many pitfalls developed above. Nevertheless, a very important proportion of managers still use the IRR method to define attractive investments. Why could this be? It can be argued that managers do not trust the cash flow forecasts they receive. In the case of two projects A and B having the same NPV, IRR plays an important role. Project A requires an investment of 8,000 and project B necessitates an investment of 80,000. As said earlier both NPVs are the same. In such a situation where the NPVs are similar, managers would go for the project, whose initial investment is the lowest. If the project were to be dysfunctional, it is always easier to recover from a small initial loss than from a bigger one. By looking at the IRR the choice is quickly made. The project with the highest IRR is the one with the less risk. To summarize we have seen that although easy to use when used correctly, there are many drawbacks to the use of the IRR. IRR ignores the size of investment projects. That is two projects may have the same IRR but one project can return many times the cash flow returned by the other project. If the project cash flows are alternatively positive and negative, then we obtain two or more IRRs, or even no IRR, which can be disconcerting for interpretation. IRR should not be used to make a choice between mutually exclusive projects because it proves to be unreliable when it comes to ranking investment projects of different scale. So Forth, the IRR rule is difficult to apply when the discounting factors used over the years are different. Indeed, it is not easy to define what opportunity cost IRR should be compared to. Modified Internal Rate of Return (MIRR) Modified internal rate of return (MIRR) is a financial measure of an investments attractiveness. It is used in capital budgeting to rank alternative investments. As the name implies, MIRR is a modification of the internal rate of return (IRR) and as such aims to resolve some problems with the IRR. Problems with the IRR While there are several problems with the IRR, MIRR resolves two of them. First, IRR assumes that interim positive cash flows are reinvested at the same rate of return as that of the project that generated them. This is usually an unrealistic scenario and a more likely situation is that the funds will be reinvested at a rate closer to the firms cost of capital. The IRR therefore often gives an unduly optimistic picture of the projects under study. Generally for comparing projects more fairly, the weighted average cost of capital should be used for reinvesting the interim cash flows. Second, more than one IRR can be found for projects with alternating positive and negative cash flows, which leads to confusion and ambiguity. MIRR finds only one value. Calculation MIRR is calculated as follows: , Where n is the number of equal periods at the end of which the cash flows occur (not the number of cash flows), PV is present value (at the beginning of the first period), FV is future value (at the end of the last period). The formula adds up the negative cash flows after discounting them to time zero, adds up the positive cash flows after factoring in the proceeds of reinvestment at the final period, then works out what rate of return would equate the discounted negative cash flows at time zero to the future value of the positive cash flows at the final time period. Spreadsheet applications, such as Microsoft Excel, have inbuilt functions to calculate the MIRR. In Microsoft Excel this function is =MIRR. Example If an investment project is described by the sequence of cash flows: Year Cash flow 0 -1000 1 -4000 2 5000 3 2000 Then the IRR r is given by . In this case, the answer is 25.48% (the other solutions to this equation are -593.16% and -132.32%, but they will not be considered meaningful IRRs). To calculate the MIRR, we will assume a finance rate of 10% and a reinvestment rate of 12%. First, we calculate the present value of the negative cash flows (discounted at the finance rate): . Second, we calculate the future value of the positive cash flows (reinvested at the reinvestment rate): . Third, we find the MIRR: . The calculated MIRR (17.91%) is significantly different from the IRR (25.48%). Lefley and Morgan have developed a financial appraisal model, which has extended the traditional appraisal methodologies so as to provide more considered comparison for individual investment projects. The Lefley and Morgan model creates a profile, which combines the uses of NPV, Discounted payback period, and the discounted payback index, (DPBI). The discounted payback period is interesting to take into consideration as the entity proceeding with the investment might be lacking money and would prefer having a quick return of the funds invested. DPBI is used to assess the number of times the initial cost of the investment will be recovered over the projects life. It is calculated by dividing the accumulated present values by the initial capital cost. Combined these methods give a fairly accurate view of an investment. Net present value vs internal rate of return Independent vs dependent projects NPV and IRR methods are closely related because: Both are time-adjusted measures of profitability, and their mathematical formulas are almost identical. So, which method leads to an optimal decision: IRR or NPV? a) NPV vs. IRR: Independent projects Independent project: Selecting one project does not preclude the choosing of the other. With conventional cash flows (-|+|+) no conflict in decision arises; in this case both NPV and IRR lead to the same accept/reject decisions. NPV vs. IRR Independent projects If cash flows are discounted at k1, NPV is positive and IRR > k1: accept project. If cash flows are discounted at k2, NPV is negative and IRR Mathematical proof: for a project to be acceptable, the NPV must be positive, i.e. Similarly for the same project to be acceptable: Where R is the IRR. Since the numerators Ct are identical and positive in both instances:  · Implicitly/intuitively R must be greater than k (R > k);  · If NPV = 0 then R = k: the company is indifferent to such a project;  · Hence, IRR and NPV lead to the same decision in this case. b) NPV vs. IRR: Dependent projects NPV clashes with IRR where mutually exclusive projects exist. Example: Agritex is considering building either a one-storey (Project A) or five-storey (Project B) block of offices on a prime site. The following information is available: Initial Investment Outlay Net Inflow at the Year End Project A -9,500 11,500 Project B -15,000 18,000 Assume k = 10%, which project should Agritex undertake? = $954.55 = $1,363.64 Both projects are of one-year duration: IRRA: $11,500 = $9,500 (1 +RA) = 1.21-1 Therefore IRRA = 21% IRRB: $18,000 = $15,000(1 + RB) = 1.2-1 Therefore IRRB = 20% Decision: Assuming that k = 10%, both projects are acceptable because: NPVA and NPVB are both positive IRRA > k AND IRRB > k Which project is a better option for Agritex? If we use the NPV method: NPVB ($1,363.64) > NPVA ($954.55): Agritex should choose Project B. If we use the IRR method: IRRA (21%) > IRRB (20%): Agritex should choose Project A. See figure below. NPV vs. IRR: Dependent projects Up to a discount rate of ko: project B is superior to project A, therefore project B is preferred to project A. Beyond the point ko: project A is superior to project B, therefore project A is preferred to project B The two methods do not rank the projects the same. Differences in the scale of investment NPV and IRR may give conflicting decisions where projects differ in their scale of investment. Example: Years 0 1 2 3 Project A -2,500 1,500 1,500 1,500 Project B -14,000 7,000 7,000 7,000 Assume k= 10%. NPVA = $1,500 x PVFA at 10% for 3 years = $1,500 x 2.487 = $3,730.50 $2,500.00 = $1,230.50. NPVB == $7,000 x PVFA at 10% for 3 years = $7,000 x 2.487 = $17,409 $14,000 = $3,409.00. IRRA = = 1.67. Therefore IRRA = 36% (from the tables) IRRB = = 2.0 Therefore IRRB = 21% Decision: Conflicting, as:  · NPV prefers B to A  · IRR prefers A to B NPV IRR Project A $ 3,730.50 36% Project B $17,400.00 21% See figure below. Scale of investments To show why: The NPV prefers B, the larger project, for a discount rate below 20% The NPV is superior to the IRR a) Use the incremental cash flow approach, B minus A approach b) Choosing project B is tantamount to choosing a hypothetical project B minus A. 0 1 2 3 Project B 14,000 7,000 7,000 7,000 Project A 2,500 1,500 1,500 1,500 B minus A 11,500 5,500 5,500 5,500 IRRB Minus A = 2.09 = 20% c) Choosing B is equivalent to: A + (B A) = B d) Choosing the bigger project B means choosing the smaller project A plus an additional outlay of $11,500 of which $5,500 will be realized each year for the next 3 years. e) The IRRB minus A on the incremental cash flow is 20%. f) Given k of 10%, this is a profitable opportunity, therefore must be accepted. g) But, if k were greater than the IRR (20%) on the incremental CF, then reject project. h) At the point of intersection, NPVA = NPVB or NPVA NPVB = 0, i.e. indifferent to projects A and B. i) If k = 20% (IRR of B A) the company should accept project A.  · This justifies the use of NPV criterion. Advantage of NPV:  · It ensures that the firm reaches an optimal scale of investment. Disadvantage of IRR:  · It expresses the return in a percentage form rather than in terms of absolute dollar returns, e.g. the IRR will prefer 500% of $1 to 20% return on $100. However, most companies set their goals in absolute terms and not in % terms, e.g. target sales figure of $2.5 million. The profitability index PI This is a variant of the NPV method. Decision rule: PI > 1; accept the project PI If NPV = 0, we have: NPV = PV Io = 0 PV = Io Dividing both sides by Io we get: PI of 1.2 means that the projects profitability is 20%. Example: PV of CF Io PI Project A 100 50 2.0 Project B 1,500 1,000 1.5 Decision: Choose option B because it maximizes the firms profitability by $1,500. Disadvantage of PI: Like IRR it is a percentage and therefore ignores the scale of investment. The Payback Period (PP) The CIMA defines payback as the time it takes the cash inflows from a capital investment project to equal the cash outflows, usually expressed in years. When deciding between two or more competing projects, the usual decision is to accept the one with the shortest payback. Payback is often used as a first screening method. By this, we mean that when a capital investment project is being considered, the first question to ask is: How long will it take to pay back its cost? The company might have a target payback, and so it would reject a capital project unless its payback period was less than a certain number of years. Example 1: Years 0 1 2 3 4 5 Project A 1,000,000 250,000 250,000 250,000 250,000 250,000 For a project with equal annual receipts: = 4 years Example 2: Years 0 1 2 3 4 Project B 10,000 5,000 2,500 4,000 1,000 Payback period lies between year 2 and year 3. Sum of money recovered by the end of the second year = $7,500, i.e. ($5,000 + $2,500) Sum of money to be recovered by end of 3rd year = $10,000 $7,500 = $2,500 = 2.625 years Disadvantages of the payback method It ignores the timing of cash flows within the payback period, the cash flows after the end of payback period and therefore the total project return. It ignores the time value of money. This means that it does not take into account the fact that $1 today is worth more than $1 in one years time. An investor who has $1 today can consume it immediately or alternatively can invest it at the prevailing interest rate, say 30%, to get a return of $1.30 in a years time. It is unable to distinguish between projects with the same payback period. It may lead to excessive investment in short-term projects. Advantages of the payback method Payback can be important: long payback means capital tied up and high investment risk. The method also has the advantage that it involves a quick, simple calculation and an easily understood concept. Discounted Payback Method Some companies require that the initial outlay on any project should be recovered within a specific period. The discounted payback appraisal method requires a discount rate to be chosen to calculate the present values of cash inflows and then the payback is the number of years required to repay the initial investment. Yet payback can give misleading answers. Project Year 0 Year 1 Year 2 Year 3 A -4,000 2,500 500 5,500 B -4,000 2,500 1,800 0 C -4,000 3,180 500 0 The cost of capital is 10% per annum Project A Year Net cash Discount factor Present Cumulative flow at 10% values present values 0 -2,000 1.00 -2,000 -2,000 1 500 0.91 455 -1,545 2 500 0.83 415 -1,130 3 5,000 0.75 3,750 2,620 Project B Year Net cash Discount factor Present Cumulative flow at 10% values present values 0 -2,000 1.00 -2,000 -2,000 1 500 0.91 455 -1,545 2 1,800 0.83 1,494 -51 3 0 0.75 0 -51 Project C Year Net cash Discount factor Present Cumulative flow at 10% values present values 0 -2,000 1.00 -2,000 -2,000 1 1,800 0.91 1,638 -362 2 500 0.83 415 53 3 0 0.75 0 53 The payback rule does not take into consideration any cash inflow that occurs after the cut-off date. For example if the cut-off date is two years, project A, although clearly the most profitable on the long term will be rejected. Thus if a firm uses the same cut-off regardless of project life then it will tend to accept many poor short lived projects and reject many good long lived ones. The Accounting Rate of Return (ARR) The ARR method (also called the return on capital employed (ROCE) or the return on investment (ROI) method) of appraising a capital project is to estimate the accounting rate of return that the project should yield. If it exceeds a target rate of return, the project will be undertaken. Note that net annual profit excludes depreciation. Example: A project has an initial outlay of $1 million and generates net receipts of $250,000 for 10 years. Assuming straight-line depreciation of $100,000 per year: = 15% = 30% We here see that ARR is based on profits rather than cash flows and that it ignores the time value of money. It therefore just gives a brief overview of a new project, and should not be recommended as a primary investment appraisal method. As said earlier the impact of cash flows and the time value of money are essential in making an investment decision. Another disadvantage of the ARR is the fact it is dependent on the depreciation policy adopted by the business. Disadvantages It does not take account of the timing of the profits from an investment. It implicitly assumes stable cash receipts over time. It is based on accounting profits and not cash flows. Accounting profits are subject to a number of different accounting treatments. It is a relative measure rather than an absolute measure and hence takes no account of the size of the investment. It takes no account of the length of the project. It ignores the time value of money. The payback and ARR methods in practice Despite the limitations of the payback method, it is the method most widely used in practice. There are a number of reasons for this:  · It is a particularly useful approach for ranking projects where a firm faces liquidity constraints and requires fast repayment of investments.  · It is appropriate in situations where risky investments are made in uncertain markets that are subject to fast design and product changes or where future cash flows are particularly difficult to predict.  · The method is often used in conjunction with NPV or IRR method and acts as a first screening device to identify projects which are worthy of further investigation.  · It is easily understood by all levels of management.  · It provides an important summary method: how quickly will the initial investment be recouped? limitations of NPV when evaluating alternative investment proposals NPV is not that flexible and only uses information available at the time of the decision. It does not account for changes to the projects after the initial decision is made. NPV factors in risk by using a single discount rate, but in reality choices in the future concerning the project will likely change its payoffs and risk. Try real option analysis instead if you want to get around this problem. NPV only evaluates tangible and quantifiable projects. Some projects with negative NPVs are carried out anyway because they have some kind of strategic value, e.g. it shows the firm in a good light, builds goodwill or allows access to as yet unknown earnings in the future. Conclusion In conclusion it can thus be stated that only discounted cash flow methods should be used for appraising investments. This leaves us with the discounted payback method, the IRR, and the NPV. The Discounted payback method, ignoring cash flows that occur after the payback point, cannot be used on its own as it simply provides an overview. Concerning the IRR, although easy to understand it has many pitfalls that have been developed above. Thus the NPV rule proves to be the safest and most reliable. Yet the ideal