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Introduction 2

Jebb Plc wants to takeover a rival company in which they believe will be successful in increasing the wealth of shareholders. Due to understanding of limited fund, managers of Jebb PLC are going to raise money through increasing debts in order to acquire target’ firm. As a senior financial manager in Jebb PLC, I have to prepare a report to analysis reasons behind takeovers and the methods by which such takeovers may take places together with the potential effects of a takeover. Then, I will give four method of investment appraisal to evaluated and rank potential investment opportunities and their merits and limitation. Moreover, the nature of gearing and potential effected of high gearing on perceived risk and cost of capital.I-Analysis of the reasons behind takeovers and the methods by which such takeovers may have take place together with the potential effects of a takeover3

II- The method of investment appraisal which may be applied to evaluated and rank potential investment opportunities and their relative merits and limitations7

1-Payback period7

2-Accounting rate of return8

3-Net present value9

4- Internal rate of return10

III- The nature of gearing and the potential effects of high gearing on perceived risk and cost of capital12

IV- Conclusion13

Appendix14

Reference17

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