Finance

PART I
DO YOU THINK FINANCE DEPARTMENTS ARE THE BEST PLACE TO TRAIN FUTURE CEOs
The responsibilities and duties of Chief Finance Officer (CFO) for any company are sine qua non and pivotal in the financial standing and position of any company. It is sole responsibility of CFO to assure and play a role of guardian to comply with all the rules and regulations of Generally Accepted Accounting Principles (GAAP) and Securities and Exchange Commissions (SEC). To grind all together, the CFO of the company is able to define its capital structure, investment opportunities and communicate other related affairs to board of directors. The role of CFO is very scrupulous and precise with all the financial numbers. The CFO must develop his own interpersonal skills such communication which is a very important pillar towards the success of any CFO because better and thoughtful communication with peers, different stake holders, etc makers the CFO successful. CFO must have a thorough and in-depth accounting knowledge and know all the matters related with the companys account. The CFO must able to handle all the affairs related with the financial managers of the company and also segregates the duties of financial mangers so that financial managers diligently accomplish and perform their job. CFO must assign all the duties to treasurers, insurance managers, cash managers, credit managers, etc.    

The main duty of CEO is to communicate well, knows the organizational culture and structure, attractive leadership skills and well known regarding the different products of the company and business segment of the company. In addition, the CEO sets objective and goals for the company and sketches a roadmap of success and also knows the art of motivation to the employees and also built the leaders in the employees through his leadership skills and styles. All these trades come from experience so the CEO must be a good learner and observer and know how to overcome with the mistakes. The CEO must have a capability to foresee the direction he wants the company to go with and assess the risk or hindrances of the company, and ability to make tough and hard decisions. Moreover, the CEO is the centre of gravity of any company so the CEO must look after all the affairs and issues related with the company and take corrective measures where it needed the most.      

There are numerous pros and vantages for promoting the CFO to CEO. Ian Butcher states that When recruitment of CFO is made every stakeholder must take onboard because the recruitment of CFO makes a reflection on the performance of the company and also highlighted the strength and weaknesses of the company. He further added the two most seeable and visible stars for the different stakeholders the chief executive and the finance director. The advantages of promoting the CFO to CEO will unquestionably his financial knowledge and scope. The CFO are financially versed with complete details of companys different project so do the companys management is able to draw a conclusion whether any further finance is needed or not on daily basis. On finger tips CFO knows the performance of different departments of the company and evaluates that which department is in distress and which are on the satisfactory side. The one vital advantage of CFO that at one point of time he deals with different stakeholders of the company like investors, board members, etc.          

There are various cons for promoting the CFO to CEO. The image of CFO is company leader. If the CFO has no background of production experience and only experience in the finance department then he cant server the organization properly because he doesnt know much about the marketing department, HR department, and other departments. The CEO just familiar with these departments on the basis of numbers. In addition, he has not complete and thorough knowledge of these particular departments. As it discussed earlier that the CFO is the premier leader of the company so he should know all the facts and figures of all the related departments. If the CFO has insufficient and meager knowledge of these departments then he cant implement and communicate the companys objective and goals to the head of departments. Moreover, if CFO has autocratic leadership style then it is dangerous and curse for the company.  
     
All in all, one should think that the finance department is the best place and the nursery of future CEOs then it is not true and the answer is ambiguous. As per my personal views, experiences and sentiments leaders are not born in the organization some people are leaders by birth and the organization just polished those leaders.  

PART II

1. Discount Rate 3.80
AccountAmountYearPVA4,70014,528B7,90027,332Together11,860

2.
Dis.
RateYear0123Total PVAnnual Profit26,000,000 64,000,000 57,000,000 0.02Coefficient  20.98040.96120.9423Present Value  225,490,196.08 61,514,802.00 53,712,373.07 140,717,371.15 0.04Coefficient  40.96150.92460.8890Present Value  425,000,000.00 59,171,597.63 50,672,792.44 134,844,390.08 0.06Coefficient  60.94340.89000.8396Present Value  624,528,301.89 56,959,772.16 47,858,299.13 129,346,373.18 0.08Coefficient  80.92590.85730.7938Present Value  824,074,074.07 54,869,684.50 45,248,437.74 124,192,196.31 0.10Coefficient  100.90910.82640.7513Present Value  1023,636,363.64 52,892,561.98 42,824,943.65 119,353,869.27 0.12Coefficient  120.89290.79720.7118Present Value  1223,214,285.71 51,020,408.16 40,571,474.13 114,806,168.00

CONCLUSION
After applying different discount rates from 2 to 12 on three years net income, it is clearly noted that as the  2 discount rate the present value of oil field project at its peak but as the discount rates rises up to 12 the present value of oil field project shrinks. The best discount rate for this project is 4, 6 and 8 respectively which produces healthy present values.    
3.
(a).
YEAR012345CASH FLOW(1,000)200 250 300 350 400
IRR 13.45
NPV 101.25

(b).
YEAR01234CASH FLOW(16)3.30 2.70 3.70 10.70
IRR 8.39
NPV 0.17

RECOMMENADTION ON THE BASIS OF NPV
In all the four years time period, the company generates positive cash flow stream which is good going but the NPV of the project looks unattractive initially due to the initial outlay and then the discount rate of 8 which shrinks the NPV of the project and in the end it not glitters. On the basis of NPV one should recommend that not to undertake the project on the basis of NPV.

RECOMMENADTION ON THE BASIS OF IRR
In all the four years time period, the company generates positive cash flow stream which is positive going and in the end it makes an impression on the IRR with 8.39.In all the four year time company generates positive and better returns due to the heavy cash flows. So, one should recommend that company should undertake the project on the basis of IRR.

(c).
NPV  04.40NPV  42.11NPV  80.17NPV  12-1.47NPV  16-2.87
TREND OF NPV FUNCTION
After the assessment of NPV by applying different discount rate from 0 to 16 it is clearly indicated that 0 discount produces healthy NPV while the other dont. The NPV  4 and 8 also produces fair NPV but the NPV at 12 and 16 produces negative NPV of the project which is not up to the mark and the management of the company should consider the NPV  0 and 4 discount rate in their decision making.