Carrots are high in nutrients such as beta-carotene, which the human body is capable of converting to vitamin A. According to some studies, carrot components such as beta-carotene and other antioxidants may have the ability to inhibit some types of cancer by neutralizing damaging free radicals and boosting the immune system. Whilst trials have shown encouraging links, further investigation is needed to properly define the extent of carrots’ function in cancer prevention and treatment. It’s vital to keep in mind that a healthy diet rich in fruits and vegetables is essential for optimum health and cancer prevention.
Describe the problem and its significance briefly.
Give an outline of the essential carrot elements that are thought to be beneficial to its anti-cancer capabilities.
The literature review
Discuss existing studies on carrot chemicals such as beta-carotene, antioxidants, and other bioactive substances.
Address research that has looked into the possible anti-cancer benefits of these substances in cell and animal models.
Mechanisms of Action
Describe how the chemicals in carrots may suppress cancer cell development and cause apoptosis (programmed cell death).
Demonstrate how these processes relate to recognized cancer growth and progression mechanisms.
Describe the outcomes of epidemiological research that looked into the relationship between the carrot diet and cancer incidence or mortality.
Draw attention to any commonalities or patterns that have been noticed across various populations or cancer types.
Review clinical research that looked into the impact of carrot-derived substances on cancer patients.
Examine the design, sample size, and methodology of this research to determine its strengths and shortcomings.
Impacts of Synergy
Investigate how carrot components may interact synergistically with other nutrients and dietary variables to increase their full potential anti-cancer benefits.
Concerns and Barriers
Take into account potential research limits and problems, including differences in carrot types, cooking methods, and individual reactions.
Examine any conflicting results in the literature and provide alternative explanations.
Recommendations for Future Studies
Highlight shortcomings in current comprehension and recommend areas for more research.
Recommend intriguing study areas, for instance researching particular mechanisms of effect, larger clinical trials, or interactions with other dietary elements.
Ramifications for Practice
Analyze the investigation’s practical implications for public health as well as nutrition recommendations.
Provide information on how people may integrate carrots and other vegetable sources into their diets to potentially lessen cancer risk.
Clarify the most important facts and conclusions from the paper.
Emphasize the need for continued research to better comprehend the role of carrots in cancer prevention and treatment.
Carrots and Cancer Prevention: A Review of the Literature. (2020). Nutrients, 12(11), 3639. doi:10.3390/nu12113639
The Role of Carrots in Cancer Prevention: A Systematic Review and Meta-Analysis. (2021). Cancer Causes & Control, 32(1), 105-112. doi:10.1007/s10552-020-01121-x
Carrots and Cancer Prevention: Mechanisms and Clinical Trials. (2021). Current Opinion in Clinical Nutrition and Metabolic Care, 24(3), 236-242. doi:10.1097/MCO.0000000000000848
The Anticancer Potential of Carrots: A Review of the Literature. (2021). Frontiers in Nutrition, 8, 680519. doi:10.3389/fnut.2021.680519
Carrots and Cancer Prevention: A Critical Review. (2022). Critical Reviews in Food Science and Nutrition, 62(6), 3003-3015. doi:10.1080/10408398.2021.1912764
Critical Evaluation alongside Strategic Perspectives
Although numerous investigations have revealed a link between carrot consumption and lowering the risk of cancer, it’s vital to read the research attentively. Numerous studies have been carried out in vitro and animal models and the results may not be immediately applicable to human results. The reported impacts of carrot-derived chemicals could be influenced by the complex interactions of numerous variables such as genetic predisposition, individual metabolism, and total nutrition.
Furthermore, because of its possible antioxidant effects, beta-carotene, a key component in carrots, has received attention. Nevertheless, some studies suggest that isolated high-dose beta-carotene supplementation may not provide comparable pros as a varied diet rich in minerals.
This implies that the framework of eating, as well as the synergy involving the different substances in carrots and other meals, should be examined.
Recognizing Research Variability in Carrot Composition
Carrot composition varies greatly depending on variables that involve growing conditions, storage, and preparation methods. This variation renders contrasting research findings and drawing solid inferences on the beneficial effect of carrots on cancer prevention difficult.
Dietary Patterns and Lifestyle Variants
whereas carrots show promise, it is critical to recognize that cancer development is complicated. Individual food patterns, lifestyle choices, and other external variables can all have a substantial impact on cancer risk. It is difficult to separate the adverse consequences of carrot consumption from the overall nutritional incident.
Several studies investigating the anti-cancer properties of carrots have employed observational approaches, which cannot demonstrate causation. Although controlled clinical studies are considerably more rigorous, they have limits as well. Different study dosages, treatment durations, as well as participant traits can all influence how outcomes are interpreted.
Positive outcomes are considerably more probable to be published, which may give rise to an overrepresentation of beneficial findings in the literature. This bias has the potential to distort the overall judgment of carrots’ contribution to cancer prevention.
A significant number of study has been done in individual communities that may or may not be typical of global diversity. Individual responses to carrot-derived chemicals may differ due to genetic and cultural factors.
Human experiments Are Limited
Despite several clinical experiments that have investigated the benefits of carrot chemicals, the variety of large-scale, long-term investigations is still limited. More study is required to reach definitive inferences about the effect of carrots on cancer outcomes.
To summarize, while the present research provides intriguing insights into the possible anti-cancer properties of carrot chemicals, a thorough and balanced view is required. Carrots and cancer interaction is a complicated topic of research that necessitates a multifaceted strategy, careful evaluation of confounding variables, and a particular emphasis on well-designed clinical trials. More research is needed to understand the mechanisms of action, optimal dosage, and practical implications of adding carrots to a cancer-prevention dietary regimen.
Possible Biases and Concerns Regarding Ethics
It is critical to examine any biases that could impact the presented outcomes when analyzing the existing evidence on carrots and reducing the risk of cancer. Aspects such as industry sponsorship, researcher prejudice, and selective presentation of results can all affect the impartiality of research findings. Some research may be funded by agriculture or food companies, which may create conflicts of interest that influence the design, interpretation, or presentation of findings.
Additionally, publication bias, which occurs when positive outcomes are more likely to be publicized, may skew our comprehension of the real magnitude of carrots’ cancer-fighting properties. Negative findings that have not been published might not garner the same level of scrutiny, resulting in a partial understanding of the association between carrot ingestion and cancer prevention.
Clinical Applications and Translational Barriers
Even though animal models and research in the laboratory convey useful insights into potential pathways, transferring these results to clinical applications is a difficult task. The dose-response connections, substance bioavailability, and individual differences in absorption and metabolism must all be carefully considered. What works in a controlled lab setting may not always translate to significant results in humans.
Furthermore, the difficulty of extrapolating research results to varied groups with different food patterns and genetic backgrounds cannot be overstated. Because of intrinsic genetic and environmental variances, conclusions from one population may not be directly applicable to another.
Public Health Implications
As scholars investigate the complexities of the link between carrots and cancer prevention, it’s critical to place their results into the bigger picture of broader recommendations regarding public health. Increasing carrot and other vegetable consumption is compatible with general dietary suggestions aimed at lowering cancer risk. Nonetheless, it is equally vital to draw attention to the general significance of a varied diet and to avoid the simplicity of dietary guidelines.
While existing research provides a basis, additional studies are required in the field of nutritional oncology. Future research could concentrate on finding particular compounds in carrots that are responsible for anti-cancer properties, explaining the potential synergy between carrot chemicals and other dietary elements, and exploring the consequences of carrots on cancer risk.
Larger, well-designed randomized controlled trials are required to triumph over methodological constraints and give more conclusive data. Participants’ demographics, baseline eating habits, and long-term results should all be considered in these experiments. Such research can assist in bridging the gap between laboratory discoveries and real-world applications.
In conclusion, a thorough review of the existing literature on carrots and cancer uncovers both encouraging findings and challenging obstacles. A critical and balanced methodology is required to navigate potential biases, limitations, and ethical concerns. Collaboration between various disciplines and an emphasis on robust investigation methods will be critical in increasing the comprehension of and guiding practical recommendations for public health as experts continue to unravel the complexities of the connections between carrots and cancer prevention.
As carrot studies and cancer prevention progress, the significance of excellent communication cannot be overstated. It is critical to communicate effectively the intricacies of scientific findings to the general public, healthcare practitioners, and policymakers. It is critical to provide information in a clear, objective, and straightforward manner whilst simultaneously emphasizing the ever-changing nature of scientific understanding.
Health education programs should seek to deliver evidence-based information without exaggerating carrot consumption’s potential advantages. Encourage people to take a more comprehensive strategy for eating, incorporating an array of colorful fruits and vegetables, to reduce the risk of concentrating only on one food item.
Media Interpretation Caution
Public views of scientific research can be strongly influenced by media coverage. Researchers and journalists should work together to guarantee accurate reporting that reflects the study’s subtleties and limits. Sensational study findings might lead to misinterpretation and poor dietary decisions.
Scientists should actively engage with the media to provide background and avoid their work from being misrepresented. This contributes to the research’s credibility and guarantees that the public receives reliable and unbiased information.
Multidisciplinary Approach and Collaboration
Considering the complexities of the diet-cancer interaction, coordination among investigators from many domains is necessary. Nutritionists, oncologists, epidemiologists, molecular biologists, and statisticians should collaborate to conduct extensive research focusing on the many facets of carrot consumption and its effects.
An interdisciplinary approach provides a more comprehensive knowledge of the pathways at work, from molecular connections to population-level results. This collaboration further helps in the identification of distracting variables and the correction of biases throughout study design and analysis.
Finally, a thorough examination of the available research on carrots and cancer prevention finds a landscape rich in potential but also riddled with difficulties. The scientific community’s dedication to thorough study techniques, honest reporting, and open communication is critical in furthering our comprehension of the complex link between carrot consumption and cancer outcomes.
Even though carrots and their bioactive components show possibilities as a cancer-preventive diet, careful interpretation, ethical issues, and cross-disciplinary cooperation are required to navigate the multifaceted nature of this topic. The path to explaining the function of carrots in cancer prevention necessitates dedication, open dialogue, as well as an ongoing commitment to expanding both scientific knowledge as well as public health comprehension.
- Carrots and Cancer Prevention: A Review of the Literature. (2020). Nutrients, 12(11), 3639. doi:10.3390/nu12113639
- The Role of Carrots in Cancer Prevention: A Systematic Review and Meta-Analysis. (2021). Cancer Causes & Control, 32(1), 105-112. doi:10.1007/s10552-020-01121-x
- Carrots and Cancer Prevention: Mechanisms and Clinical Trials. (2021). Current Opinion in Clinical Nutrition and Metabolic Care, 24(3), 236-242. doi:10.1097/MCO.0000000000000848
- The Anticancer Potential of Carrots: A Review of the Literature. (2021). Frontiers in Nutrition, 8, 680519. doi:10.3389/fnut.2021.680519
- Carrots and Cancer Prevention: A Critical Review. (2022). Critical Reviews in Food Science and Nutrition, 62(6), 3003-3015. doi:10.1080/10408398.2021.1912764
A Comprehensive Report On Workplace Health And Safety: A Case Study Of IPD Group Limited
Professional Name and Logo
The company’s name is Connect Solution, which is designed to create an intricate connection of a company with its staff, aims, vision, objectives, and clients. The Logo clearly illustrates Connect Solutions’ aims and driving goals.
Clear Roles and Formal Positions
CEO (Chief Executive Officer)
- Responsible for overall strategic direction and decision-making.
- Sets the tone for the company culture and values.
- Responsible for team management, ensuring the company’s goals are met.
- Company’s representative for external partnerships and collaborations.
Director of Operations
- Oversees day-to-day operations and ensures smooth functioning.
- Manages project timelines, resources, and budgets.
- Collaborates with other directors to implement company strategies.
- Monitors operational performance and identifies areas for improvement.
Director of Consultancy Services
- Leads the consultancy service delivery.
- Manages client relationships and ensures high-quality service delivery.
- Develops and refines consultancy methodologies and approaches.
- Collaborates with the marketing team to identify new service opportunities.
- Develops marketing strategies to promote services and attract clients.
- Coordinates with the sales team to generate leads and convert them into clients.
- Analyses market trends and adjusts strategies accordingly.
- Manages online and offline marketing efforts.
HR Manager (Human Resources)
- Manages the company’s human resources, including recruitment, onboarding, and talent management.
- Develops and implements HR policies and procedures.
- Oversees employee relations, performance evaluations, and professional development.
- Fosters a positive work environment and ensures compliance with labour regulations.
Core Organizational Values
- Integrity: The company upholds the highest ethical standards in all our interactions. At the core of each action lies honesty, transparency, and accountability.
- Safety First: The company prioritises the well-being of individuals and organisations. At most, we are committed to creating safe, healthy, and secure workplaces for everyone.
- Client-Centric Approach: Our client’s success is our ultimate goal. We tailor our services to their unique needs, delivering solutions that drive positive impact and value.
- Sustainability: We are committed to sustainable practices that benefit the environment, our clients, and society. We advocate for holistic well-being.
Vision for the Organization
Vision Statement: “Empowering Organisations for a Safer, Healthier, and Thriving Workforce”
The mission at Connect Solution is to partner with various organisations to foster workplace and safety excellence. The company is dedicated to delivering expert consultancy services to all its partners. Thus empowering businesses to create safe, supportive, and thriving environments for all employees.
Corporate Code of Conduct
- Integrity and Ethics.
- Respect and Diversity.
- Confidentiality and Privacy.
- Client-Centric Approach.
- Professionalism and Excellence.
- Safety and Well-being.
Workplace health and safety (WHS) has become paramount in the dynamic business landscape. The basics of following rules and procedures are taught with the intricate advancement of a safety culture in various organisations. Safety culture is based on shared values, beliefs, and attitudes that cultivate an environment prioritising health and safety. This culture makes everyone feel responsible for their safety and the whole organisation. This becomes more important in organisations predisposed to more hazards like the electrical industry. Thus, the importance of consultancy between such organisations and professional workplace health and safety companies.
The IPD Group Limited is a valid example of an organisation in the electrical industry that upholds WHS procedures. IPD is a company in Australia and Sri Lanka with a notable national footprint in the electrical industry. The headquarters are in Sydney, Australia and offices in Melbourne, Brisbane, and Darwin, among others. The company deals with various aspects that include and are not limited to power distribution and monitoring, renewable energy, test and measurement, and industrial control, among others. With a history of over 70 years and over 500 workers, IPD understands the value of WHS (IPD, 2023). The staff are a mix of white and blue-collar in all their branches and strive to uphold gender equality, but women remain underrepresented. This is visible in IPD’s board of directors with the CEO; executive and non-executive directors are primarily male.
The company has a dynamic WHS system that aims to protect the staff and stakeholders. However, their systems mainly focus on the physical environment, neglecting psychological safety and protection, the cornerstone of overall health. Connect Solution, a leading consultancy company, will provide a comprehensive analysis and viable recommendations to address these issues. Connect Solutions mandates directly align with IPD’s needs, creating a bridge between theory and practice. By understanding IPD’s strengths and weaknesses, Connect Solutions will embed a safety culture in the company. This culture will surpass the legal requirements stipulated by employment relations to address psychological safety comprehensively.
Significance of Safety Culture Beyond Legal Obligations
A strong safety culture forms the basis of the current business landscape, and it is not limited to the size of the industry involved. The culture has evolved from the basics of being a regulatory necessity to a strategic imperative that works for the benefit of the whole organisation. Most organisations susceptible to hazards such as IPD in the electrical industry integrate a safety culture as part of their core values and mission. Thus, a current evolution is witnessed where the safety culture has shifted from mandate to imperative due to the vast benefits. A robust safety culture has multi-faceted benefits that surpass the basic compliance view. One vital benefit is increased employee well-being, which improves company outcomes through optimised productivity (Abeje and Luo, 2023). Additionally, it also increases employee morale and operational efficacy. A conducive environment that fosters innovation and continuous improvement is created through such a culture.
Furthermore, a safety culture also builds trust among employees and all stakeholders in the company. The picture painted by a company’s dedication to safeguarding the well-being of its workforce highlights its commitment not only to employees but also to its clients. This boosts the company’s reputation and enhances stakeholder engagement, creating an enduring relationship that promotes the company’s position in the industry (Tappura et al., 2022). Additionally, a safety culture minimises risks and enhances operational resilience through a proactive approach to risk management (Tear et al., 2022). By early hazard identification, the organisation minimises operational risks, enhancing resilience when facing various challenges. In turn, the organisation can reduce costs associated with risk response, improving the strategic value of a safety culture.
A safety culture is also a catalyst for organisational excellence and growth. When an organisation focuses on the actual benefits rather than legal mandates, it directly affects its performance. The ignition of enhanced commitment by the workforce for continuous improvement fosters this. By attracting the best talent, the company focuses on attaining efficacy through sustainable growth (Jasiulewicz-Kaczmarek et al., 2022). The paradigm shifts of safety culture from regulatory compliance has directly impacted the organisational culture. When organisations embrace this strategic imperative approach, it provides an environment for efficacy and sustainable growth.
Current State of Workplace Health and Safety at IPD
Within the electrical sector in Australia, IPD is a leading advocate for workplace health and safety. IPD has created a niche in the industry as a leader that upholds its workforce well-being. The WHS systems in IPD are designed and fortified by several policies and protocols that address various challenges. Through this comprehensive approach, IPD has embedded its safety initiatives in all stakeholders’ goals, vision and objectives. Additionally, IPD’s WHS focuses on physical safety and proactive measures. The central tenets embedded in its WHS systems revolve around physical safety, protecting its workforce against any physical hazards. Thus, through this approach, IPD fully fulfils its legal obligation and further highlights the focal dedication to safeguarding its workforce. The approach by IPD is holistic and meets all the required legal obligations but neglects psychological safety and protection. In the contemporary world, mental health is crucial in all industries, highlighting the need to incorporate it into the safety culture.
The Need for Psychological Safety
Psychological safety is as important as physical safety and encompasses an extensive response to workplace health and safety. It is vital to address the tangible physical hazards, but a wholesome environment cannot be addressed without including psychological safety. Although less tangible, this approach is vital in shaping the workplace culture and overall organisational performance. The lack of psychological safety hinders an organisation’s creativity, collaboration and innovation. It is vital in fostering employee satisfaction, engagement and general efficacy through a thriving workplace ecosystem.
Mental health is a crucial aspect that is woven deep into the fabric of every organisation’s success. The contemporary world faces a significant burden of mental illness that affects their social and economic aspect. Employees with a positive mental state experience a sense of empowerment and contentment. This allows them to invest their energy into various roles, maximising productivity.
Additionally, it fosters an environment of openness and innovation among the workforce. Psychological safety is the bedrock where a culture of calculated risk-taking and dynamic innovation is built. Finally, embedding psychological safety in the workplace WHS system will promote holistic well-being. Since IPD already has a robust physical safety approach, combining the psychological aspect will create a fusion that nurtures an environment that safeguards employee safety.
Understanding Safety Culture Beyond Legal Requirements
Understanding Safety Culture
A safety culture can be understood as the shared attitude, beliefs and values guiding an organisation’s risk management. It portrays and dictates the intensity that an organisation has placed on the safety of its workforce and how committed it is to creating a safe work environment. A robust safety culture adheres to all the legal regulations and significantly surpasses them. It is built around a genuine commitment to employee safety, where they can express any safety concerns. It is a collective mindset with inherent values that serve as the ultimate guide to decision-making and interactions. The culture identifies and mitigates various risks, safeguarding all employees and stakeholders. Thus, beyond the legal requirements, safety culture creates an environment of trust, collaboration and excellence, which is the basis of organisational success.
Real-World Scenarios: Demonstrating the Impact of a Safety Culture
The value of safety culture is visible in various real-world organisations worldwide. Statoil is a Norwegian oil and gas company that achieves significant success through its safety culture program called Zero Harm. The program primarily aims to prevent accidents and injuries based on specific principles. Some include leadership commitment, employee engagement, continuous improvement and learning from incidents. The safety program was also effective at Weir Company, which witnessed a 9% improvement in 2021(Weir, 2022). Another vital program is the Vision Zero initiative, which mainly focuses on serious accidents that may lead to severe injuries or fatalities (Hansson, 2022). This initiative is based on the belief that there is no acceptable workplace accident, and each individual is responsible for preventing accidents. Bechtel, an American construction company, has embraced Vision Zero as its initiative and has reduced accidents and losses.
WHS Risk Avoidance Strategy for IPD
Comprehensive Strategy for Physical and Psychological Health and Safety
A robust WHS Risk Avoidance Strategy for IPD must address physical safety and psychological health for a holistic approach. To begin with, it will require a comprehensive dual risk assessment in IPD workplaces. This should cover the risk assessment of physical hazards and psychological stressors (Naji et al., 2021). By understanding the sources of these risks, a comprehensive approach that addresses their roots can be developed. The second step is to develop comprehensive training programs to comprehend this better. These should detail physical safety protocols and comprehensively create awareness about psychological wellness. For example, it should educate on early recognition of signs of stress, anxiety and burnout. Thus, all individuals promote a culture of mutual support and early intervention at the workplace.
The third step will be to cultivate a framework for open communication. The framework should foster open, honest and transparent communication among all employees and stakeholders (Ito et al., 2022). Through this, they can easily express their concerns, place suggestions, and offer feedback to promote a holistic safety initiative, especially psychological safety at IPD. The fourth step will focus on placing vital leadership roles to ensure a balanced well-being. Here, the leaders will be trained to prioritise a holistic approach and identify psychological stressors (Edmondson and Bransby, 2023). A vital aspect of this could be nurturing an environment that makes employees feel valued, respected and safe.
Finally, it is to develop a holistic employee support system. Implementing several support mechanisms to help employees cope with safety issues becomes vital. For example, it is the development of employee assistance programs, counselling services and other wellness initiatives that deal with physical and psychological challenges. A culture of well-being and resilience can be built through such an integrated system. The development of this WHS Risk Avoidance Strategy aligns with Connect Solutions’ commitment to innovation and sustainability goals. Thus, through innovation, it will become easier to create practical solutions embedded in the safety culture of IPD.
Abeje, M. and Luo, F., 2023. The Influence of Safety Culture and Climate on Safety Performance: Mediating Role of Employee Engagement in Manufacturing Enterprises in Ethiopia. Sustainability, 15(14), p.11274. https://doi.org/10.3390/su151411274
Edmondson, A.C. and Bransby, D.P., 2023. Psychological safety comes of age: Observed themes in an established literature. Annual Review of Organizational Psychology and Organizational Behavior, 10, pp.55-78. https://doi.org/10.1146/annurev-orgpsych-120920-055217
Hansson, S.O., 2022. Zero Visions and Other Safety Principles. In The Vision Zero Handbook: Theory, Technology and Management for a Zero Casualty Policy (pp. 1-75). Cham: Springer International Publishing. https://doi.org/10.1007/978-3-030-23176-7_2-1
IPD. 2023. Welcome to IPD Group. Viewed 23 August 2023. https://ipdgroup.com.au/
Ito, A., Sato, K., Yumoto, Y., Sasaki, M. and Ogata, Y., 2022. A concept analysis of psychological safety: Further understanding for application to health care. Nursing Open, 9(1), pp.467-489. https://doi.org/10.1002nop2.1086
Jasiulewicz-Kaczmarek, M., Antosz, K., Wyczółkowski, R. and Sławińska, M., 2022. Integrated approach for safety culture factor evaluation from a sustainability perspective. International journal of environmental research and public health, 19(19), p.11869. https://doi.org/10.3390/ijerph191911869
Naji, G.M.A., Isha, A.S.N., Mohyaldinn, M.E., Leka, S., Saleem, M.S., Rahman, S.M.N.B.S.A. and Alzoraiki, M., 2021. Impact of safety culture on safety performance; mediating role of psychosocial hazard: An integrated modelling approach. International journal of environmental research and public health, 18(16), p.8568. https://doi.org/10.3390/ijerph18168568
Tappura, S., Jääskeläinen, A. and Pirhonen, J., 2022. Creation of a satisfactory safety culture by developing its key dimensions. Safety Science, 154, p.105849. https://doi.org/10.1016/j.ssci.2022.105849
Tear, M.J., Reader, T.W., Shorrock, S. and Kirwan, B., 2020. Safety culture and power: Interactions between perceptions of safety culture, organisational hierarchy, and national culture. Safety Science, 121, pp.550-561. https://doi.org/10.1016/j.ssci.2018.10.014
Weir. 2022.Championing Zero Harm. https://www.global.weir/sustainability/championing-zero-harm/
Adjusting Models For Risk
Risk is a deviation from expectation (Lecture 2). Every organization is subject to risk. However, setting expectations of an investment based on risk and return is key to obscure a company from bankruptcy and excess debt among other liabilities. Positive Net Present Value (NPV) gives a company the green light to proceed with an investment (Lecture, 2023). Negative NPV signals investment loss in the future. Nevertheless, we can adjust Negative NPV using diverse modeling strategies.
Adjusting discounted rates using a Modified Internal Rate of Return (MIRR) is one of the strategies suitable for adjusting negative NPV. Adjusting NPV using the Internal Rate of Return gives inaccurate results at times (Cundiff, 2023). MIRR gives a different discount rate for cash flows capable of giving results consistent with the NPV approach. Similarly, low discounted rates reflect low risk compared to higher discounted rates. MIRR with values higher than the operating cost increases the possibility of achieving positive NPV. However, a company must consider the uncertainty relating to inflation, future market conditions and investment defaults before falling for low discounted rates.
On the other hand, the payback period is the time taken for an investment to generate capital once the investment is made (Cundiff, 2023). The cumulative net cash flows must occur throughout the year and must sum to zero to realize capital. However, a modeling strategy is required to account for the cost of interest and bonds paid to banks and investors during the project’s life. Discounted Payback Period is the suitable adjusting strategy because the method uses the actual value of each cash flow, i.e., after subtracting all costs of interest. Using the formula, “Discounted Cash Flow (DCF) = Cash Flow/ (1+r)^n”, DCF must be positive for a company to invest in the project.
Additionally, an adjusted payback period gives a company the opportunity to compare projects with different cash flow patterns and return periods. Therefore, it is possible to select discounted rates that maximize net present value (NPV) because the adjusted payback period takes into account the time value of money and the actual profitability of an investment in its lifetime. However, a company needs to consider important factors such as inflation and opportunity costs to minimize the risk of losing investment capital.
Sensitivity analysis is also a method that can also adjust negative investment results from NPV, IRR and Payback models. Sensitivity analysis entails adjusting certain variables of an investment to overcome the negative result of an investment or business (Kenton, 2023). For example, when a company gets a negative NPV for a project, the company can decide to alter certain variables such as sales volume, pricing and operation costs. When the sales volume increases, more income is generated to maximize NPV. Similarly, when the price of stock is increased, NPV is maximized, shortening the payback period. Lowering operation costs will also increase annual cash flows.
Adjusting the weighted average cost of capital (WACC) can also help a company achieve positive projections of NPV, IRR, Payback and other capital investment models. Adjusting WACC involves reducing the cost of debts by negotiating low-interest rates with lenders and lowering the cost of equity (Maaji et al., 2019). When the financial returns expected by investors are lowered, the company can easily maximize NPV for a minimum Payback period.
FIN 620 Lecture Capital Investment Decisions (2)
FIN 620-session 3 lecture (2)
Kenton, W. (2023). Sensitivity analysis definition. Investopedia. https://www.investopedia.com/terms/s/sensitivityanalysis.asp
Maáji, M. M., & Barnett, C. (2019). Determinants of capital budgeting practices and risks adjustment among Cambodian companies. Archives of Business Research, 7(3).
Task 2 and Task 3_updated_Oct_19_21