From: Manager – Accounts
To: Senior Management – Whizz Bang Corporation Ltd (WBC)
Subject: Information on Project Evaluation
Date: 8th March 2018

Summary
This report, which is forwarded to the senior management of Whizz Bang Corporation Ltd (WBC) consists of the capital acquisition decisions, the project evaluation methods and their usability and the WACC calculation of the company. The senior management are provided with these information for the use of decision making and to enable WBC to serve its stake holders well by using the data given in this report.
Scenario 1: Capital Acquisitions
At WBC the practice was to replace the worn out part of a machine once the usable time period of the part is finished. Only few details were considered before the replacement and only few details were provided for the capital acquisition request. This practice is in correct as per my view. There are many criteria and facts to consider before a capital replacement is done. Specially for an expensive item like this. So I think the following factors should be considered before a capital replacement.
1. Mechanical Department’s Recommendation
As the mechanical department is the best department to evaluate the present condition of the avaialbe part, they should be asked for their opinion on replacement, rather than doing the replacement as a practice. Thus the mechanical department should evaluate the usable life of the part and recommend to the maintenance department via an internal memo whether the part needs to be replaced or not.

2. Replacement cost of the part
It should be considered about the cost of replacement and whether the correct procedure of purchasing is followed. WBC should strictly stick to its logistics controls in situations like this. It should be called a few quotations from few venders and evaluate the quality of the product. They the purchasing department should choose the best option from the available and get the necessary permissions from the relevant parties on capital replacement and the relevant Purchase orders, goods received notes etc should be checked and signed. After all these procedures are done only the payment should be done by the finance department to the supplier.