Jaguar Plc

The present value of the project is US $1.3 million. Currently, he can raise US $ 650,000 by pledging his personal assets.

* From the NPV perspective this is a good project to invest in with the current bid price. The current bidding situation has made it more competitive. That means the more he can bid, the better would be the chances to get the business. At the same time he is increasing his personal financial risk and approaches the max limit that he can borrow.

The reasons are:

1) He is a successful entrepreneur and has a good experience in the current industry. He can also do the thing on his own without his current partner. He has the expertise and his staff's support to carry on the business.

2) The project has Net Positive Value. It is a growing business which is going to yield positive returns. This will help him pay his debts very quickly.

3) As a general practice, the project bid price is 10 times the net income after taxes. For the year 1998, this amount is US $ 805,770, which is1.3 times larger than US $650,000.

4) He is emotionally attached to the project.

5) Once he owns the company, extra cash requirement is financed by bank against the available business cash (100 % of cash) and Account receivable (75 % of Account Receivable).

In my personal opinion, he needs to further raise the bid price which should be

$750,000. These are some ways that he can raise the additional amount.

* The additional money can still be borrowed against personal assets. I think, this would be still calculated and manageable risk for future benefits. He can negotiate with the bank to lend him more money if he's mortgaging his assets.

* He can also borrow the additional amount from his friends and relatives and give them the shares of the company as the major chunk of the company's shares will be with him he wont have to give up his management and wont have to deal with others interference in the company.

* He can also talk to institutional investors like Liberty (just an example) for investment in the company and give them some part of the company and still have the hold on the company by being the major shareholder.

* He