Investment decision Essay Example | Topics and Well Written Essays - 3750 words

Investment stopping point - Essay ExampleDue to high dependency on equity in the capital structure, keep down embody of capital went quite high (19.63 pct). The required return on asset is 18 percent which is less then cost of capital, so the companys new project does not seems advantageous until and unless the prevailing capital structure is modified.As per the market scenario in Kuwait, deferent debt instruments where determined to find bug out which one will be more suitable for the company. It is recommended that company should introduce more debt to reduce the cost of capital. As the market conditions are improving, the operating risk will go down and by enhancing fiscal leverage management will be able to boost profitability of the company.The company, Kuwait Cement was open up in the year 1968 by Amiri Decree. In 1978 the first phase of cement plant was inaugurated by fop Jaber Al Ahmad Al Sabah which had the production capacity of 1,350,000 scores per annum. The comp any started production of white cement in the year 1979 and the capacity was to produce 75,000 tons of white cement per year. With passage of time the companys capacity to produce cement went on change magnitude and it reached 2,070,000 tons per annum by end 1984. Kuwait cement entered in contract with M/s. PEG Switzerland for providing consulting services to the project of clinker kiln whose production capacity was 1.8 million. The new(prenominal) services which the company was to provide were management of equipment at Shuaiba port, storage of fuel and conveyor belt management. At different point of time the company formed contracts with many international firms to enhancing the production capacity and to introducing ruin and advanced technology. With the growing demand of white cement in the market, Kuwait Cement went on increasing the white cement production and by the year 1999 the production capacity reached to 170,000 tons as compared to 75,000 tons