Report on Financial Analysis on Wonderland Confectionaries

Wonderland Confectionaries is a well – developed chain of restaurants that is willing to invest large sums of money into a theme park, based on the model of their competitor and surrogate company, Alice Limited. Given the facts, I will now try to establish whether the management’s decision to invest into this project is a well-documented and viable one. Further on, I will try to prepare a report analysing a few important aspects that managers should take into account when making such an investment appraisal, like the analysis of two main models used primarily when assessing the risk and return of one investment, the net present value model (NPV) and the capital asset pricing model (CAPM), along with each model’s limitations. Further on, I will make a brief theoretical description of the financial and non – financial issues each manager should be aware of, together with their applicability for our case study. In the end, because like any financial author describes, when making a project appraisal, a financial manager should consider real options as well, because it is a well-known and demonstrated fact that financial statements and analysis do not account for the uncertainty of each particular project, thus being limited to the expected, calculated outcomes, not considering the unexpected. Liabilities (in £ 1,000,000) | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Market Research | 0.40 | 0.00 | 0.00 | 0.00 | 0.00 | Operation Costs | 17.00 | 17.85 | 18.74 | 19.68 | 20.66 | Insurance Costs | 2.00 | 2.12 | 2.25 | 2.38 | 2.52 | Labor Costs (Employees) | 35.00 | 37.45 | 40.07 | 42.88 | 45.88 | Construction Costs | 310.00 | 250.00 | 0.00 | 0.00 | 0.00 | Advertising Savings | 3.00 | 3.18 | 3.37 | 3.57 | 3.79 | Total | 367.40 | 310.60 | 64.43 | 68.51 | 72.85 | | | | | | | | | | | | | Revenues (in £ 1,000,000) | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Admission Fees | 131.40 | 139.28 | 147.64 | 156.50 | 165.89 | Food and Drinks

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