Explain and justify the ventures potential success Essay

Explain and justify the ventures potential success - Essay Example Since financial risk is connected with inclusion of debt capital, this implies that if there are no debt funds hence there will virtually be no financial risk. This also implies that activities which are totally financed by equity convey no financial risk. Subsequently, equity capital has the long-term potential for generating superior returns for the investors and is thus considered as appropriate source of finance especially for new business ventures. The investment appraisal techniques reveal that the net present value of investment is  £19,538.43 with an IRR of 29 percent. As the return on investment is more than cost of capital, it is apparent that project is viable and investors may accept this project. It is also apparent that budgeting will contribute towards the success of the business venture. Below is an outline of the anticipated budget as well as pricing structure for the business venture. The average per unit cost of delivering pizza is expected to be  £20 for sale of 8,825 units (in first year) and considering the demand of product and current competition in market, the management could expect sales turnover of around  £176,500. This means that average revenue per unit of pizza delivered will be  £31.14 (shown in price chart above) making a profit of  £11.14 per unit. The pricing structure is viable since it will enable the business venture to raise enough revenue to sustain its operations as well as to generate profits. Essentially, the aim of business is to make profit and this is achievable since our products are likely to attract more