Analysis Of Finance Related To Apple Assignment Sample

1.0 Introduction

1.1 Related to the Assignment the Information

This assignment focuses on explaining how a large corporation, Apple Inc., would be able to source for cash for a new project. The briefing is specially centered on how Apple could source £100 million with which a plant will be put up for manufacturing assemble.

1.2 Background of Apple Inc.

Apple Inc. is a well-known technology company originating from United States of America that has expanded its business all over the world. It began in 1976 and is located in Cupertino, California, USA. Companies such as Apple that make famous gadgets such as iPhone, iPad, MacBook, apple watch, etc.

1.3 Apple’s Expansion Decision

Apple has increased its expansion by an amazing level by planning to construct another manufacturing factory. This plant will contribute to increased production of products by Apple and efficient delivery of the products to its customers.

2.0 Question 1

2.1 Information related to Apple Inc.

Apple Inc. is part of the technology industry that is involved in the production of consumer electronics (Li et al. 2022). The company popularizes products such as the iPhone, iPad, Mac computers, and Apple Watch. , Apple Music, iCloud, App Store, etc., through which it also generates its revenue.

2.2 Direct and Indirect Financing

Figure 1: Direct Financing and Indirect Financing

There are two broad avenues that a firm such as Apple could use in order to source for funds, and these are direct financing and indirect financing.

Direct financing refers to the way in which funds are obtained from the public directly. This has the following subcategories; this can include the offering of the shares which are equities, or the offering of bonds which is a form of debt (Al et al. 2021). Here, Apple addresses the people or companies who contribute the money it needs in this case.

Secured sources of funds mean borrowing funds via an agreement with a bank or a financial institution. For instance, equipment bought on an invoice settlement terms are financed indirectly because the seller provides Apple with money in the form of an invoice and gets paid in installments.

2.3 Apple’s Past Financing Sources

Financing directly is used by Apple. In the past, Apple used to go for bonds as a way of finding capital it needed for its operations and development. For instance, in the year 2021, Apple floated about 14 billion US dollars’ worth of bonds with yields ranging from 0.0070 and 0.0265. These rates where low which made borrowing a cheap affair.

Apple also has high liquidity. Marketable securities of Men’s Warehouse in 2024 had approx. $162,373 million.

2.4 Preferred Method and Reason

It is predicted that Apple will likely go for direct method of financing for investing in a new manufacturing plant worth £ 100 million. The reasons behind it are mentioned below.

• Apple has a good credit standing hence it can borrow at relatively low costs via bonds.
• Apple has a lot of capital and it might be to export its own funds (internal funds).
• Regarding financing directly the cheaper side is noticed, and with the help of this to Apple help is provide effectively in comparison with bank loans.

3.0 Question 2

3.1 Financial Intermediaries for Apple Inc.

Apple Inc. now plans to open a new manufacturing venture which is going to cost £100 million. In order to obtain this money, Apple can use the help of financial intermediaries. It refers to organizations that assist commit in sourcing for funds from either investors or creditors.

3.1.1 Commercial Banks

In the form of common intermediaries, the presence of commercial banks are noticed. It can lend to companies, for instance Apple (Zhang, 2022). Earlier, Apple did not depend on the bank loans as it had adequate amount of cash and the cost of borrowing money for the company is relatively low in the market.

3.1.2 Investment Banks

Apple works with investment banks to sell bonds, shares (equity), and commercial papers in the market. Earlier, Apple used the services of investment banks including Goldman Sachs and Morgan Stanley (Qiu, 2022). For instance, in 2021 Apple launched bonds and sold them for 14 billion dollars.

3.1.3 Funds of Pension Private Equity and Hedge Funds

These institutions employ significant amount of money and this money helps them fulfill most of their chores. It can be used as a capital to purchase equity or for other forms of profits in the future (Chen, 2024). Private equity is not typical in such large and globally recognized company as Apple to be named as a major player related to it. However pension funds and hedge funds invest in bonds of Apple or in shares of the company.

3.1.4 Brokers and Financial Advisors

In many cases, brokers and advisors search for investors for Apple or manage its funds. For instance, brokers assist Apple in marketing its bonds or shares to major investors. They do not offer funding personally but they act as brokers.

3.1.5 Leasing Financial

Another form of financing available to Apple should it wish to purchase machines or equipment for the new plant could be through financial lease. This implied buying equipment on hire basis rather than acquiring new equipment through purchase.

3.2 Comparison: Home vs Host Country

In the Company, home country, U.S., have more financing like large investment banks and pension funds (Julieth et al. 2025). The UK’s may include local banks or leasing companies for the plant the case of Apple. However, for large funding, it will still prefer to source it from the United States.

4.0 Question 3

4.1 The place its shares are issued by Apple

Apple Inc. stock floats in the NASDAQ Stock Exchange in United States of America. Company Apple uses AAPL as its symbol on the stock exchange. This is the point where one can enter to buy and/ or exit in order to sell the shares of the company.

4.2 Capital Raised by Apple

Apple is already a giant and wealthy company at the present time. It must also be noted that in the last few years Apple has not been issuing new shares to the public for sale (Katerine, 2025). Instead, it relies on its own sources and sometimes involves its creditors through the issuance of bonds to finance it operations.

4.3 Share Buyback Program

Anyway, in the last three years Apple had been engaging in share buybacks instead of issuing new shares to raise finances. A share buyback stands refers to the process whereby the company purchases some of its shares in the market out of its cash reserves.

An example regarding it is mentioned below.

• This year, Apple invested in $ 89 billion share repurchases.
• In 2023, Apple spent about $77 billion.
• Last year, spending of Apple was approximately $77.5 billion again.

4.4 Reasons for Share Buybacks

There is however, several reasons why Apple continues to buy back its shares:

• To increase the value of each share of stock by completing the reduction of the stock and shares.
• To refund the money to the shareholders instead of declaring high dividends.
• To make investors believe that the company has the capacity to deliver profitability in the future.

This it is evident that Apple has a lot of free cash which they rather use to buy shares rather than having a lot of free cash or going for capital.

5.0 Question 4

5.1 Investor Returns from Apple Stock

It is seen that the investors who invested in Apple Company one year ago have a good gain on their invested amount (Baima et al. 2024). It is used by analysts to determine how much money an investor has made over a given period of time, and it is known as the Holding Period Return.

Figure 2: Investor Returns from Apple Stock

Regarding Apple the Prices are mentioned below:

• In 8th May 2024 at $181.99 the presence of price is noticed.
• Price on May 8, 2025: $196.23
• Dividends over the year: $0.94 per share

Therefore, the HPR will be calculated as follows: HPR = ($196.23 – $181.99 + $0.94) / $181.99 = 0.0834 or 8.34%

This will mean that investors received 8.34 percent returns per year for the last – one year period.

5.2 Comparison with the Market

Figure 3: Comparison with the Market

The S&P 500 is another popular benchmark index that refers to the broad market in the United States. Over the same period: Throughout the similar period the values of S&P 500 are mentioned below.

• S&P 500 on May 8, 2024: 5,187.67
• S&P 500 on May 8, 2025: 5,569.06

Therefore, HPR = ((5,569.06 – 5,187.67)/ 5,187.67) = 0.0735 or 7.35%.

It implies that the market option has a return of 7.35% over the one-year period.

In a comparison between the two, it was seen that the performance of the Apple’s stock was slightly higher than the general market trend.

5.3 Revenue in the last three years

When previous values are looked back the below values presence are noticed.

• 2022-2023: the price per share of Apple rose from $ 150 to $ 170 that has given a return of approximately 13.3%.
• 2023-2024: Thus the price swelled from $ 170 to $182, it has yielded almost 7.1%.
• 2024-2025: As calculated, a return of 8.34%.

Overall, Apple has been giving positive returns to the shareholders in these three years.

The performance of Apple Inc.’s stock can also be seen as it has provided a better return in the last one year compared to the market average.

6.0 Question 5

6.1 Apple’s Bond Ratings

Apple Inc. has one of the best credit rating with S&P Global Ratings at a level of AA+ meaning the company’s credit risk is extremely low (Butarbutar et al. 2023). As a result, this high rating enables Apple to obtain loans at relatively lower interest charges.

6.2 Selected Bond: Apple 4.85% due May 10, 2053

Figure 4: Bond 4.85% due May 10, 2053

Take Apple’s bond with an annual interest rate of 4.85% and its maturity date of May 10, 2053 as an example.

Bond Details:

• At $1000, the presence of face value is noticed.
• Coupon Rate: 4.85%
• Maturity: May 10, 2053
• Coupon Payment: $48.50 annually

Calculating Expected Bond Price

To evaluate the bond’s price, the current market yield is requested of corresponding AA+ corporate bond, and compare it to the bond’s coupon rate (Hanif et al. 2025). The current interest rate used in market for these types of bonds is around 5.52%.

Figure 5: Expected Bond Price

Price equal to $48.50 / 0.0552, and the value derived is $878.62.

6.3 Collateral Status

Apple’s bonds are unsubordinated, which means that they are not guaranteed by any assets. Where creditors depend on the solidity and credit worthiness of Apple.

6.4 Whether Stocks or Bonds will be abided by Apple

Due to fact that Apple’s credit rating is well above most companies and it holds a large amount of cash, issuing bonds are far preferable to issuing stocks.

Below the Prefer Bonds reasons are mentioned.

• Lower Cost: Apple can always borrow at low interest rates due to the favorable credit rating.
• No Ownership Dilution: However, offering bonds is different from offering stocks because it does not affect the proportion of the share ownership of existing shareholders.
• Tax Benefits: Many people are aware that interest payment on bonds are tax-deducted, and when applying it to Apple, it lowers down its taxable income.

7.0 Question 6

7.1 Main Risk Factors That Apple Inc. presently have in their Business

Apple Inc. is one of the giants of the modern day technology market which deals in personal computers and portable music players (Lin et al. 2023). However, there are various risks associated with every business and a business giant like Apple also encounters numerous risks.

7.2 Risk in Market

Market risk is another type of risk that originates from the economy. When individuals earn less money or get laid off, they will not be able to afford new iPhones or Macs (Khalid and Vida, 2023). High price levels in a country can also bias the level of consumption; people reduce their expenditure when they feel that prices are generally high.

7.3 Firm Risk

This means internal risks within the company for example damage to property, theft or workplace accidents. If Apple produces a product that is flawed or one that people will not buy, they can lead to losses (Krause, 2023). Furthermore, belief in image and innovation plays a significant role in the operation of the business, specifically for Apple.

7.4 Industry Risk

Apple is one company that falls under the technology industry. This industry changes very fast. Competition from new technology, products, and low-cost competitors are some of the major threats.

7.5 Risk in Chain of Supply

It is important to note that Apple has its products manufactured in many different places across the world (Aitken, 2021). As for the location, the three most popular countries with factories are China, India, and Vietnam.

7.6 Currency Risk

Apple Inc. deals with the sale of its products in so many countries. If the U.S. dollar appreciates however, Apple realize less value of foreign income when it convert them back to dollars. This is called foreign exchange (FX base) risk.

7.7 Other Country Risks

In some countries, there are political vulnerabilities comparable to shifts in laws, taxes, or a ban on the company’s products. Some applications can be banned or some services can be restricted or some products that Apple might want to offer might not be allowed in certain countries such as China or Russia.

7.8 The Process through which Risk is managed by Apple

Apple control risks through international operation, multiple sources of supply, and cash reserve. It also focuses on cybersecurity and aims at innovation to remain relevant.

8.0 Question 7

8.1 FX Risk from New Investment

Apple Inc. now seeks to borrow £100 million from the UK market to finance the formation of a new project. This is because, while Apple earns most of its revenues in US dollars (USD), it will have to use the loan to pay back in British pounds (GBP) thus exposing the company to foreign exchange (FX) risk.

8.2 Risk Related to Historical Rate of Exchange

Analyzing the chart of the pair USD/GBP for the last ten years, one may observe that the rate varies from $1.20 to $1.60 for one British pound. This proves that currency value can fluctuate a lot.

8.3 The way FX Risk Can be Hedged by Apple

Nonetheless, it’s possible for Apple to hedge its FX risk through the following means:

There is much that Apple can do to minimize this FX risk some of the available methods are:

• Forward Contracts: Companies like Apple can lock the exchange rate today so that they can use it to purchase pounds in the future.
• Currency Swaps: Apple can sell USD to another party at a given time for a given rate and likewise buy it for a given rate at a given time.
• Options: Apple can sacrifice a small amount of cash to hedge itself against adverse movements in the exchange rates while at the same time stand a chance to gain from a favorable rates.

These tools assists Apple in not being caught off-guard by change in currency.

8.4 Interest Rate Risk

It has already issued a 100 million pounds bond and the coupon, or the interest rate on the bond for now, is at 4% (Bissaban and Steve, 2021). If interest rates go up in future in UK, then Apple will have to filter out higher interest rates as well. Risk related to rate of interest is created through this.

8.5 The Way Interest Rate Risk can be hedged by Apple

Ways used by Apple to manage interest rate risk According to the analysis done it becomes clear that interest rate risk if not managed can have a very big impact on Apple’s performance thus the following ways that can be adopted by Apple to manage the interest rate risk:

Apple can use:

• Interest Rate Swaps: This hampers Apple because the business can change the floating interest rate with the fixed one in order to cut costs.
• Forward Rate Agreements (FRA): Apple can fix the future interest rates in advance for its safeguard against the risks.

That is why, now, applying the same free tools as in the first model to hedge the exposure on FX and interest rates, it is possible to manage the new UK loan exposure at Apple more safely.

If you are studying Apple Inc. financial decisions, this assignment sample explains funding methods, capital structure, risk management, and market performance in a clear format. With support from Native Assignment Help, students can better understand how large companies raise £100 million and apply financial theories effectively in their academic work.

9.0 Conclusion

This assignment focused on the sources through which Apple Inc. can source funds to put up a manufacturing plant, which costs £100 million. It prescribed how financing decisions are made in the company, its financial sources, risks involved and how such risks can be minimized.

References

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