Management Accounting For SIM Evaluation

Evaluation of Investment Projects Using SIM

Discuss about the Management Accounting for SIM Evaluation.

The SIM evaluation tools have been able to effectively state on the different types of the areas related to the Strategic Investment Model. Some of the main consideration of the evaluation tools has been conducive in stating on the relevant factors such as Risk Management, CSR, Financial estimate and various types of the other strategic factors. The various types of the qualitative factors captured in this model have been able to state on the relevant factors such as the CSR impact of the projects.

In this particular aspect, it has been found that acquisition of the fully integrated wine company in China is scored as 35, while the investment opportunity in the hotel project fairs at 30. This shows that the later project is more harmful to the health, safety, education and the general welfare of the people. The adequate capture of the sustainability issues has been further been provided by the evaluation of the project in terms of the various types of factors which are seen to be associated to the impact of both the project on the environment. Some of the other consideration made in the evaluation process has been able to state on the different issue, which has been able to show the relevant theories associated to the different types of the impacts on the reputation of the firm. It has further able to depict the different types of the other consideration, which needs to be made in the different types of the fields of strategic decision-making. The other strategic factors such as the alignment with the existing strategy, impact on the reputation of the firm, possessing of the core competencies, impact on the deciding of the investment has been further seen to be an effective factor which is directly related to the various type of the factors associated to the sustainability of the projects.

Based on the financial evaluation of both the projects it has been able to be found that the NPV of the project associated to the acquisition of the vineyard in the China is $ 47.59 million, the IRR is 11.5% and the payback period is 9.3 years. On the other hand the project associated to the investment made in the luxury hotels has been seen with an total NPV value of  $ 57.13 million, the IRR is 11.8% and the payback period is 9.2 years.

Based on the various types of the financial factors it is recommended to the management to go with the investment made in the luxury hotels. This has been able to state the various types of the advantages associated to this project has been also seen in terms of the higher level of optimism than the former project. The management also needs to consider that the various types of the other advantages associated to the sustainability factors has been identified to be greater in terms of the investment made in the luxury hotels. The different types of the other considerations made in the project have been further been able to state on the different types the issue, which are seen in terms of payback period. It can be clearly seen that the recommended project has been payback period of 9.2 years than 9.3 years. It can be further seen that the recommended project has a higher value of the Internal Rate of return. Some of the main assumptions made in the project have been able to state on the different type t issue, which are seen to be related to higher level of expected return in the future. The total SIM score of the both project has been further seen as 94 and 157. Due to the higher score of SIM allotted for the investment in the hotel project, it is feasible for Kilgor’s to go forward with approving the decision.

Reference List and Bibliography

Burns, R. and Walker, J., 2015. Capital budgeting surveys: the future is now.

Dellavigna, S. and Pollet, J.M., 2013. Capital budgeting versus market timing: An evaluation using demographics. The Journal of Finance, 68(1), pp.237-270.