Appraisal of foreign direct investment Essay Example | Topics and Well Written Essays - 3500 words

Appraisal of foreign direct investment - Essay Example A review of capital structure of FUSE plc has also been undertaken. Foreign direct investment implies transfer of capital, managerial, and technical assets by a multinational entity from the country where it is based to the country where investment is made. FDI may involve participation by the host country in equity capital, managerial control, and operational control. FDI decisions are complex issues as FDI projects are subjected to a variety of risk factors. For the case under study the FUSE plc has set up certain criterion for taking a decision for investment in a power generating project in Pajistan. The basic rule for investment decisions is that the internal rate of return on the project should be greater than the weighted marginal cost of the investment. The rule dictates that â€Å"accept projects up to the point at which the marginal return on an investment equals its weighted cost of capital. Beyond that point, its investment return will be less than its capital cost.† (Lawrence J. Gitman, page 519)i However, the investment criterio n of FUSE Plc for investment in emerging market like Pajistan is three fold as under: As per above criterion of investment, the computations of hurdle rate become imperative. Hurdle rate is the â€Å"minimum acceptable rate of return for a proposed project to merit investment. Usually, the hurdle rate is the opportunity cost of capital or the best return the company could get by investing the capital elsewhere. To be financially justifiable, a project’s internal rate of return must exceed the hurdle rate set by the firm for such project.†(Paul M. Swamidass, page 286)ii FUSE plc has set its hurdle rate for Pajistan project at 5% above the weighted cost of average capital to the company. Accordingly computations of WACC are important to devise the required hurdle rate. It is important to note that â€Å"cost of capital is the rate of return that a firm must earn on the projects, in which it invests to maintain the

Employee competence & reward strategys - Read the provided case study Essay

Employee competence & reward strategys - Read the provided case study on UtilityCo then answer the questions set out in the Project Outline document - Essay Example An individual can be said to be competent if he possesses the skills, knowledge and abilities that are necessary to perform a particular task that the individual is given the responsibility of. With such a combination of traits, a person can be able to competently perform a task in any given situation or a working environment. In the same respect, one may lose competency without losing the skills, abilities or knowledge if the requirements for executing a particular task changes or the working conditions changes (Dickmann, 2008). Competency is also used as a general term when the requirements of people in communities and organizations whereby there are requirements for the people to perform various tasks for the community or organization. These can be described by the various requirements that organizations have put in a particular language for the employees to be considered competent or what educational institutes have put in a specific language for the students to graduate from them. One of the most important aspects of this kind of competence is that it has to be an action competence and this means that the people must show their competence in action (Armstrong, 1999). As far as human resources are concerned, it is more significant to have competence development policies especially for some general competences that an organization is dependent on to run its business. The general competences can be classified into levels and they include the novice whereby a person who can be classified as a novice has the behavior based on the rules of the organization and is very inflexible as well as very limited. The next level is the experienced beginner whereby this employee has the ability to incorporate aspects from a given situation. The third level is the practitioner who is capable of acting consciously in relation to any long term plans and