Question

Hi guys, help me please.

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

Answer 1

PCP Ltd can consider reinvesting profits, borrowing through banks or bonds, or issuing stock as long-term funding options for their new division.

Step-by-step explanation:

The company, PCP Ltd, can consider several long-term funding options to finance their planned new division. Some of the options include:

Reinvesting profits: The company can allocate a portion of its profits generated from the existing specialized manufacturing division to fund the development of the new division.

Borrowing through banks or bonds: PCP Ltd can obtain a loan from a bank or issue bonds to raise the necessary financial capital. This option allows the company to have access to funds while spreading out the repayment over time.

Issuing stock: PCP Ltd can offer shares of its company to investors through an initial public offering (IPO) or private placement to raise funds for the new division. This option allows the company to bring in new investors and share the financial risk.

Each option has its advantages and disadvantages, and PCP Ltd should consider their financial situation, risk tolerance, and growth objectives when evaluating the long-term funding options.

Answer 2

Step-by-step explanation:

Hi guys, help me please.

Using a structured approach to decision making and the facts in the scenario above,

explain and evaluate the long term funding options available to the company to

finance their planned new division. (this is the quesion)

Scenario

PCP Ltd, established in 1990, manufactures optical instruments for markets in the UK

and the USA. Since 2007, their market in the USA has been in decline, due to an influx

of lower precision, cheaper supply from the Far East. Because of this, in 2009, PCP

decided to focus on supplying specialist optical products for use in Medical procedures

and research, opening a specialised manufacturing division based in Chicago. This

division has performed well, even though the costs of supporting management and

supply functions from the company HQ in the UK have been higher than was anticipated

in their original return calculations, which employed only NPV to establish the viability of

investment in the division. The company is now considering the development of a further

new division to research and develop new optical medical technology, following recent

market research data which indicated that the medical technology market is growing

across the developed world. PCP Ltd has not declared a cash dividend since 2017,

although a stock dividend was issued in 2020.