Identify and briefly explain two non-financial considerations which you believe should be taken into account before a final decision is made.

February 25, 2021/in Finance /by Eunice

Assessed Task 2: Evaluation of Proposed Investment in a Second Model

Your company’s Board of Directors is considering whether or not to launch a new artificially intelligent model of robot (‘Model 2’) in 2035 and you have been asked to:

evaluate the financial merits of this opportunity;
to make a recommendation to management regarding whether this investment decision should be implemented; and
to identify what other issues beyond your financial appraisal should be considered before a final decision is made.

The new model will require investment in R&D Project 11. If your business has not already invested in this project, the cost will be W$1.5m, of which 60% will be treated as Development costs and 40% as Research costs.

The new model will also require investment in a new R&D Project; either:

Project 20, which will cost W$300,000 if you have not already invested in R&D Project 11; or
Project 21, which will cost W$1.3m if you have already invested in R&D Project 11.

Again, 60% of the R&D cost will be treated as Development costs and 40%as Research costs.

The materials for this new model will cost W$3,000 per unit.

Following the results of a market research study which has already been carried out at a cost W$20,000, the marketing department has proposed that the retail sales price of the new model should be W$9,000 per unit (before retailer’s discount).

The market research suggests that at that sales price the sales volume for Model 2 for each year is expected to be as follows:

Year 1 200 units

Year 2 300 units

Year 3 400 units

Year 4 500 units

Year 5 600 units

Your company will need to carry out a technical feasibility study for the project at a cost of W$75,000. If the investment does go ahead then the production of the new model will require the use of factory space which could otherwise be sub-let for annual income of W$30,000.

Also, it is estimated that the project will result in an increase in fixed overheads of W$25,000 per annum and an additional member of staff will need to be recruited to act as product manager for the new model.

Your company usually evaluates investment opportunities over a 5-year timescale using the Net Present Value method.

Your business has in the past applied the following assumptions when evaluating capital investment projects:

an investment in working capital at the start of each year representing 5% of that year’s sales revenue will be required
an allowance for general fixed costs of 10% of revenue be included in the analysis representing an allocation for general administration and overhead costs
a cost of capital of 11% has been applied.

Task Details/Description:

Prepare a brief report for the Board of Directors which evaluates the financial merits of this investment opportunity.

Your report should address the following detailed requirements:

Perform a financial evaluation of this investment opportunity. (A table highlighting the relevant cash flows together with detailed workings to support your net present value calculation should be presented in an appendix).
Using the table below, explain your reasoning for the treatment of the items specifically referred to in the narrative above as ‘relevant cash flows’ or otherwise. (This table should be included in your main report and not in an appendix).

	Item	Relevant Cash Flow? (Yes or No)	Rationale for Treatment as Relevant or Otherwise
1	Cost of R & D Project 11 of $1.5m
2	Cost of R&D Project 20 of $300,000
3	Cost of R&D Project 21 of $1.3m
4	Amortisation of R&D Project Costs
5	Cost of market research study of $20,000
6	Cost of technical feasibility study of $75,000
7	Factory rental income of $30,000 per annum
8	Increase in fixed overheads of $25,000 per annum
9	Cost of additional staff member to act as Product Manager
10	Allowance for general fixed costs of 10% of revenue per annum

Identify and briefly explain two non-financial considerations which you believe should be taken into account before a final decision is made.
Provide a clear recommendation to the Board as to whether this project should go ahead.
Provide a list of any assumptions you have made in an appendix.

Note: The majority of members of the Board of Directors do not have a finance background so your report will need to include clear and appropriate explanations of the financial techniques and concepts which you have used in your analysis.

Word limit: 500 words excluding tables, charts and appendices.

Prepare a report analysing the performance of and comparing the performance of the company over the last 2 years under the following headings :

February 25, 2021/in Finance /by Eunice

Finance for Managers

The word count is 1,200 words with a 10% margin.

You must compute the ratios yourself rather use than the ones provided and they MUST be calculated as shown in the file below . You must include the workings.

The ratios you need to calculate are included below. It is these you must calculate. You will not gain any marks for other ratios and will lose marks if you do not calculate these.

		Amadeus
Gross profit margin
Gross profit turnover	x 100	Gross profit Operating revenue (Turnover)	x 100
Operating profit margin
Profit Before Interest and tax Turnover	x 100	Operating P/L [=EBIT] Operating revenue (Turnover)	x 100
Operating Expenses margin
Operating expenses Turnover	x 100	Other operating expenses Operating revenue (Turnover)	x 100
Sales growth rate
Turnover_{latest year}– Turnover_{previous year} Turnover_{previous year}	x 100	Use, for the calculation Operating revenue (Turnover)	x 100
Return on shareholders’ investment
net income Capital and reserves	x 100	P/L for period [=Net income] Shareholders funds	x 100
Return on capital employed
Profit Before Interest and tax Capital and reserves + debt	x 100	Operating P/L [=EBIT] (Shareholders funds + Long term debt)	x 100
Current Ratio
current assets:current liabilities	?:1	current assets: current liabilities	?:1
Acid test (quick) ratio
(current assets :current liabilities less inventory	?:1	current assets: current less Stock liabilities	?:1
Gearing ratio
debt Capital and reserves + debt	x 100	Long term debt) Shareholders funds + Long term debt	x 100
Interest cover
Profit Before Interest and tax Interest paid	times	Operating P/L [=EBIT] Financial expenses	times
Asset turnover
Turnover Total assets	times	Operating revenue (Turnover) TOTAL ASSETS	times
Receivables days
accounts receivables Operating revenue (Turnover)	x 365 days	Debtors Operating revenue (Turnover)	x 365 days
Inventory days
Inventory Cost of goods sold	x 365 days	Stock Costs of goods sold	x 365 days
Payables days
Accounts payable Cost of goods sold	x 365 days	Creditors Costs of goods sold	x 365 days
Cash Operating Cycle
Receivables days + Inventory days – Payables days	days	Receivables days + Inventory days – Payables days	days

Most of the data you will need will be provided in the income statement and statement of financial position in the accounts you have retrieved. You also need end of year market price and number of shares outstanding and these can be accessed by clicking on stock data and then Annual stock data (see below). You need this data to compute the following ratios:

Earnings per share
net income Number of shares		P/L for period [=Net income] Shares outstanding (th) Note the (th) means you need to multiply the figure by 1,000 to get the number of shares
Price Earnings ratio
End of year share price Earnings per share		Market price – year end Earnings per share

Calculating appropriate accounting ratios prepare a report analysing the performance of and comparing the performance of the company over the last 2 years under the following headings :

Profitability,
Liquidity,
Working capital management,
Solvency & risk,
Shareholder return,
Overall financial performance.

Explain the initial and ongoing financial planning advice you provide to clients regarding estate management issues.

February 24, 2021/in Finance /by Eunice

Instructions to students

• This assignment focuses on Topics 5 to 8, but as these later topics require knowledge of earlier topics, you may draw from any topics relevant to the case study. It accounts for 50% of your final grade.

• There is one (1) case study question in this assignment. You should answer all aspects of the case study.

• The overall word limit for the assignment is 3,500 words. Marks will only be awarded for answers up to the word limit (plus/minus 10%) for each question. Any material written after this will not be counted towards your mark for that question. Headings, quotes and references within the body of the answer are included in the word count. Numerical tables, calculations and reference lists are not included. For more information on word counts and their rationale, go to Assessment à Assignment à General assessment information.

• Marks will be awarded for presentation, research effort and referencing.

• Refer to the Criteria-based Marking Guide for guidelines on what is expected for each question.

• The ‘General assessment information’ section in KapLearn contains information about format and presentation, word limits, citations and referencing, collusion, plagiarism and other policies, useful resources, submitting your assignment and accessing your results.

• Full workings must be shown for all calculations. Show all calculations in the text of your assignment and not attached as an appendix. Appendices to assignments will not be read.

• Answers are to be in your own words. Reference and cite all your sources (within the text of your answer) when quoting or using material from external sources. Include a reference list at the end of your assignment. For further information on referencing, refer to the ‘Referencing Guide’ available under the Additional resources from the Learning Hub.

• Indicative weightings are noted beside each question. Use these weightings to assist you with your allocation of time and resources. The weightings indicate the relative importance of each question.

• State all assumptions used in providing your answer.

• Requests for special consideration, or information pertaining to special consideration written in the body of the assignment, will not be considered by the marker. Refer to the ‘special consideration’ section of the Assessment Policy on Kaplan’s website for more information.

	Marks
1. Explain the initial and ongoing financial planning advice you provide to clients regarding estate management issues.	10
2. Demonstrate knowledge and understanding of how assets are treated on death, incapacity, divorce or insolvency.	10
3. Analyse the initial and ongoing estate planning and succession risks faced by clients.	20
4. Propose a range of strategies and potential solutions to manage clients’ estate risks.	20
5. Propose a range of strategies and potential solutions related to business succession planning, including rural circumstances.	20
6. Explain the implications of choosing various estate or succession planning strategies to clients.	10
Marks for the presentation and quality of the overall answer.	10
Total marks	100

Assignment presentation and referencing (10 marks)

You are required to research beyond the subject notes in answering the questions in this assignment. Reference and cite all your sources when quoting or using material from external sources. Include a reference list at the end of your assignment.

You are required to:

use an appropriate presentation and format for your assignment
demonstrate independent research and analysis
demonstrate appropriate use of relevant references
follow the Harvard referencing style as recommended in the ‘Referencing and Citations Guide’ available from the ‘Learning Hub’ in KapLearn
include a reference list at the end of your assignment following the recommended referencing style
adhere to the assignment word limit.

Criteria-based Marking Guide for presentation and referencing

The Criteria-based Marking Guide provided at the end of each question is designed to assist students to understand what is expected of them in each question and to let them know how their performance will be judged. It provides advice about the criteria used in the marking of the question and what discriminates between an excellent, satisfactory and unsatisfactory answer.

What is your plan for enhancing your knowledge of finance and budgets in the healthcare organization?

February 20, 2021/in Finance /by Eunice

Guidelines for Touchpoint Reflections
A downloadable version of the guidelines, which includes further information, is available for access in the Week 1 discussion thread.

Reflection Information
This is the final week of discussion and there are two important areas of reflection included in this discussion. label each area with a heading to facilitate classmate and instructor response.

EXPERIENCE
Post your executive summary.
Compare your pre-and post-self-assessments.
REFLECTION
Discuss the strengths and weaknesses to the business plan for your final proposal.
Identify areas of strength and weakness related to financial and budgeting principles discovered through your pre- and post- self-assessments comparison.
IMPLICATIONS FOR THE FUTURE
What adjustments are needed for you to create the most compelling plan?
What concepts from the course do you need to study further?
What is your plan for enhancing your knowledge of finance and budgets in the healthcare organization?

Describe the major pros and cons of financial globalization.

February 19, 2021/in Finance /by Eunice

Students are requested to address the following points:

There is no formal definition of what constitutes a small state, but it is generally accepted that this label applies to sovereign economies with populations of less than one and half million people (IMF). Ceteris paribus, small states are relatively more open to trade and to international financial flows, compared to bigger economies; they also tend to be less diversified in terms of production structure and export base. Clearly enough, being more open and highly specialized in terms of their production, they are also more vulnerable to external shocks (IMF, 2013).

In the light of the above and considering the theoretical framework discussed in class, describe the major pros and cons of financial globalization. Please support your analysis with some examples (e.g. a small country like Iceland vs a big country like Italy) (25 points)

Despite having adopted a floating exchange rate, sometimes Central Banks (CB) are asked to intervene in the currency market to smooth out excessive FX fluctuations. There are two

major reasons for such interventions to occur:

oInternational trade and investment decisions are much more difficult to make if the exchange rate value is changing rapidly: if the exchange rate fluctuates abruptly, traders and investors will become more uncertain about the profitability of their deals and will likely reduce their international activities.

oTrade deficits (CA deficits) can rise rapidly if a country’s exchange rate appreciates significantly: a higher currency value will make foreign goods and services relatively cheaper, stimulating imports, while domestic goods will seem relatively more expensive to foreigners, thus reducing exports.

In the light of the theoretical framework presented in class, please clarify the relationship between the Balance of Payments (BoP) and exchange rate dynamics (please, try to support your claims making specific reference to Iceland).

Discuss the short run and long run implications of CBs’ FX interventions on the Official Reserves Settlement (ORS). Has the ECB ever pursued this kind of interventions? Why? (25 points)

The concluding remarks of the study fit quite well with the Impossible Trinity issue: could you please clarify this point in the light of the theoretical framework (Trilemma) discussed in class?

Based on your understanding, which element(s) of the Trinity should Iceland have controlled more ab origine? (25 points)

Before the crisis, Iceland BoP was characterized by profound disequilibria: a large current account deficit, combined with rising interest rates and a very strong domestic currency. The post-crisis adjustment has thus been very quick and extremely violent. Would you be able to explain why? During the very same period, other countries have experienced abrupt BoP adjustments (e.g. Greece): would you be able to spot some similarities/major differences? Please, do not forget to support your claims with examples and references to the theoretical framework discussed in class. (25 points)

STRUCTURE AND FORMAT OF THE PAPER:

Students are required to write an original essay based on the assignment above. Students are required to work autonomously. Essays will be discussed and challenged during the oral presentation. More than any specific conclusion, student will be assessed based on their

knowledge of the course program
ability to use economic logic
ability to deal with quantitative methods

The project should include:

Executive summary (max 1 page)
Introduction
Body of the work (assessments should be BOTH quantitative and qualitative)
Conclusion
Bibliography, Graphs and Appendixes

Format of the report:

The report should display a coherent structure: title page should include student name, module name, lecturer name, date and school name followed by contents page, introduction, executive summary, methodology, findings, analysis, conclusions, recommendations, referencing and appendices.
The report should be prepared as a neatly typed Word document (Times New Roman 12 points), with double spacing and page numbering.
All reports will be discussed in class in a power point presentation of no more than 20 minutes. The presentation should be a summary of your work.
Tables or work/data taken from other sources may be included in an appendix.
All sources must be referenced in the text and a full bibliography must be provided (including visited websites) in the Harvard style referencing system. Paraphrasing or direct quotes taken from other sources must be clearly indicated with citations. No footnoting!
Students are reminded that depth, relevance and variety are the crucial elements of quality research. (Wikipedia is not considered to be a relevant source of information; any students referencing Wikipedia will be deducted marks! Alternatively if you find information on Wikipedia use the original sources listed at the bottom of the article)
Students are reminded to use valid and peer-reviewed references to support their work. Websites should only be used if they represent an established source and only for facts and figures. Students should make the most of academic and practitioner books and articles.
Submission should be by the deadline below on Turnitin.com.
All work must conform to University regulations on Cheating, Collusion and Plagiarism’ as described in your program handbook. You are advised to use the Harvard referencing style and avoid plagiarism.

Define and distinguish between the terms Allowance for Loan & Leases (ALL) and Provision for Loan & Lease Losses (PLL).

February 17, 2021/in Finance /by Eunice

Do a google search on Quantitative Easing (QE) and Open Market Operations (OMO) (in your response, provide the reference for your source(s)

Explain how each of these Federal Reserve tools work.
Under what circumstances does the Fed use OMO?
When and why has the Fed used QE? Are there concerns related to it?
Do a google search on the Fed’s Balance Sheet (indicate your reference source). Identify the primary assets and liabilities on the Fed’s current balance sheet and their significance for financial analysts.
Identify and briefly explain the important characteristics and features of:
commercial bank trust departments
investment banks
See if you can determine the amount of Bluebird State Bank’s current net income after taxes from the figures below (stated in millions of dollars) and the amount of its retained earnings from current income that it will be able to reinvest in the bank. (Be sure to arrange all the figures given in correct sequence to derive the bank’s Report of Income in an Excel Spreadsheet.)

Effective tax rate	28%
Interest on loans	$90
Employee wages, salaries, and benefits	13
Interest earned on government bonds and notes	9
Provision for loan losses	5
Overhead expenses	3
Service charges paid by depositors	3
Security gains/losses	–7
Interest paid on federal funds purchased	5
Payment of dividends of $4 per share on 1 million outstanding shares to be made to common stockholders
Interest paid to customers holding time and savings deposits	40
Trust department fees	3

Comparing balance sheet characteristics of small versus the largest banks. Go to www.fdic.gov select “Researchers & Analysts,” click “Statistics on Depositary Institutions (SDI),” and view “Comparison Reports.” Set up two columns for the period ended 09/30/2020 then click “Standard Peer Group” and select: Commercial Banks with Assets of $100M to $1B and Assets more than $250B. Click “Next.” Then select “Assets & Liabilities” as percent of total assets (click “Next”) and find and record each of the following percentages for each group in a table:

Number of institutions (row 1)
Cash and due from depository institutions (row 4)
Securities (row 6)
Federal funds sold & reverse repurchase agreements (row 7)
Net loans & leases (row 8)
Trading account assets (row 10)
Total deposits (row 17)
Federal funds purchased & repurchase agreements (row 21)
Volatile liabilities (row 46)
Total equity capital (row 26)

Discuss the differences in percentages between small and large banks.

Define and distinguish between the terms Allowance for Loan & Leases (ALL) and Provision for Loan & Lease Losses (PLL). Illustrate the relationship between ALL and PLL using a simple equation.

Explain and discuss the financial and related challenges presently facing your organisation and highlight areas where support would be welcomed.

February 15, 2021/in Finance /by Eunice

The government’s Ministry of Sport is seeking to better understand the challenges that sport organisations are facing as they seek to navigate the post-Covid 19 landscape. Along with a number of other Chief Executives of sport organisations, you have been invited to prepare a short paper for the Sport Minister in which you explain and discuss the financial and related challenges presently facing your organisation and highlight areas where support would be welcomed.

What are some of the risks cited in the article with respect to actions the Federal Reserve is taking?

February 12, 2021/in Finance /by Eunice

5. Read the WSJ article “20200427_The Federal Reserve Is Changing What It Means to Be a Central Bank – WSJ.pdf” ( article attached in link below)
and discuss the following questions:

(1) What is the projected size of the Federal Reserve balance sheet in absolute terms and as a % of GDP? How does this compare to the Great Depression and World War II?

(2) Why is the Fed’s balance sheet expanding at this pace?

(3) What are some of the risks cited in the article with respect to actions the Federal Reserve is taking?

(4) What steps in the Fed taking to support state and local governments?

Explain the role of management professionals with regard to accounting and analysis ethics, and you will detail any challenges managers may face in ensuring ethical accounting practices.

February 12, 2021/in Finance /by Eunice

High-profile cases of accounting fraud in recent years, in addition to the prevalence of earnings management practices to deliberately mislead investors, suggest that ethics are a significant concern for accounting, financial analysis, and management professionals.

For this discussion, you will explain the role of management professionals with regard to accounting and analysis ethics, and you will detail any challenges managers may face in ensuring ethical accounting practices. You will also reflect on how the things you have learned in this course will aid you in your career. Your response for this final discussion will be in the form of a video using the built-in video functionality in the discussion area.

Review the codes of ethics and professional standards in the module resources and then address the following questions:

What is the manager’s responsibility regarding ethical financial reporting?
What challenges might a manager face in ensuring ethical accounting and financial analysis practices?
In your responses to your peers, compare and contrast your perceptions with their assessment of the role of managers regarding ethical accounting practices and the challenges they may face. Can you identify additional challenges? How does their assessment of the future impact of this course compare with your own? Please note that replies to your peers can be done via video or a written response.

Explain what a call provision enables bond issuers to do. Why would bond issuers exercise a call provision?

February 11, 2021/in Finance /by Eunice

In a Word document, respond to the following. Number your responses 1–4.

1.Explain what a call provision enables bond issuers to do. Why would bond issuers exercise a call provision?

2.Define a discount bond and a premium bond. Provide examples of each.

3.Describe the relationship between interest rates and bond prices.

4.Describe the differences between a coupon bond and a zero coupon bond.

Use references to support your responses as needed. Be sure to cite all references using correct APA style. Your responses should be free of grammar and spelling errors, demonstrating strong written communication skills.

In either a Word document or Excel spreadsheet, complete the following problems.

You may solve the problems algebraically, or you may use a financial calculator or an Excel spreadsheet.
If you choose to solve the problems algebraically, be sure to show your computations.
If you use a financial calculator, show your input values.
If you use an Excel spreadsheet, show your input values and formulas.
In addition to your solution to each computational problem, you must show the supporting work leading to your solution to receive credit for your answer.

Compute the following:

1.Assuming semi-annual compounding, what is the price of a zero coupon bond that matures in 3 years if the market interest rate is 5.5 percent? Assume par value is $1000.

2.Using semi-annual compounding, what is the price of a 5 percent coupon bond with 10 years left to maturity and a market interest rate of 7.2 percent? Assume that interest payments are paid semi-annually and that par value is $1000.

3.Using semi-annual compounding, what is the yield to maturity on a 4.65 percent coupon bond with 18 years left to maturity that is offered for sale at $1,025.95? Assume par value is $1000.

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