Financial Management 3000 -3500words
Subject bmpj 6304 financial management
Word limit: 3000 to 3500 words
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Operation requirements:
The purpose of this assignment is to test your understanding of financial management knowledge and your ability to apply it in actual work scenarios.It’s better to use your own work experience to describe your understanding of financial concepts.You need to use your investment evaluation tools and cost of capital theory to help management make the right decisions.
This assignment must contain an introduction, text and conclusion.The introduction emphasizes the importance of capital cost and investment evaluation, and the text includes the answers to the following questions.Write your findings and suggestions in the conclusion section.
task
Plaggio needs to replace its production equipment to meet the demand for increased production.The following are three items of capital expenditure related to equipment replacement. The executive director of the company requires you to analyze and recommend one.
| Bidding project | A | B | C |
| cost | 310,000 myr | 280,000 myr | 380,000 myr |
| life expectancy | 5 year | 5 year | 4 year |
| Estimated residual value | 10,000 myr | 30,000 myr | 20,000 myr |
| Estimated cash flow | Monetary unit: ringgit | myr | myr |
| Year end (cash flow) | |||
| 1 | 90,000 | 100,000 | 155,000 |
| 2 | 110,000 | 100,000 | 165,000 |
| 3 | 85,000 | 80,000 | 95,000 |
| 4 | 80,000 | 80,000 | 100,000 |
| 5 | 75,000 | 60,000 |
The minimum rate of return (cost of capital) required by the company is 12%
- a) Calculate the payback period of each bidding project (6 points)
- b) Calculate the accounting rate of return for each bidding project (using the straight-line method for depreciation) (9 points)
- c) Calculate the net present value (NPV) of each bidding project (9 points)
- d) Calculate the intrinsic rate of return for each bidding project.(9 points)
- e) Make a statement: according to the calculation of the above evaluation indicators, which bidding project should be selected respectively.Write the advantages and disadvantages of each evaluation index.
- The financial manager of plaggio thinks that the cost of capital affects the value of the company and is closely related to the capital structure of the company.The capital structure of a company includes liabilities and shareholders' equity.To calculate the company's cost of capital, he collected the following information:
- i) The company's capital structure includes 30% liabilities and 70% shareholders' equity
- II) the company's existing 20-year bonds with an annual interest rate of 12% and a face value of RM1000 per bond. The current bond price is
1252 Ringgit.
III) the company uses the capital asset pricing model (CAPM) to calculate the cost of shareholders' equity. The risk-free interest rate is 2.5% per year, the stock beta coefficient is 1.6, and the market return is 12% per year.
- IV) the company pays 30% tax per year.
requirement:
- a) Calculate the company's after tax debt cost.Explain why the after tax cost of liabilities is used to calculate the cost of liabilities rather than the cost before tax.
(6 points)
- b) Calculate the cost of shareholders' equity of the company, and calculate the weighted average cost of capital (WACC) in the form of list.(10 points)
- c) Explain any two factors that can affect the company's cost of capital, but are not controlled by the company.(4 points)
- d) Discuss four ways to raise funds and discuss their advantages and disadvantages.(20 points)
(40 points in total)
Introduction to report format (5%) task 1: summarize the company situation in this assignment and the operation objectives (about 250-350 words)
Text (80%)
Task: using the information given, discuss the evaluation index of investment scheme.In each index, the reasons for selecting a certain project are given, and the advantages and disadvantages of each scheme are given.2
Task: discuss the capital structure of the company3
Task: discuss the weighted average capital structure, how to calculate it and why.4
Task: discuss the factors that can affect the weighted average capital structure.5
Task 6: discuss various possible ways for an enterprise to raise funds.
(about 2300-2500 words)
Conclusions and recommendations (10%)
Based on the information provided in the assignment requirements, write down your findings, conclusions and suggestions, as well as the above capital costs2
6 Make critical comments and write limitations.(about 250-350 words)
References (5%)
You will use the company's annual report, secretary, professional journal articles, related magazines, newspapers and online materials to give references.Both the quotation in the text and the quotation at the end of the article should adopt Harvard document quotation format
Referencing style,。
Other requirements:
Further Instructions
Font style: Times New Roman & font size: 12 for content, 14 for sub sections and 16 for main sections
Line spacing: 1.5 line spacing
Page layout / orientation: Portrait layout: Overview
- All the margins should be set about 25mm on both sides (i.e. left & right) of each page and justified.
The left and right margins of the paper must be 25 mm and set to “adjustable”
Digital systems (e.g. 1.0, 1.1 and 1.1.1) should be used for each section and subsection
- Word count must be indicated on the cover page of the assignment.
The paper must have a cover with clear words on it
The number of words required for the assignment does not include references and references.If your assignment exceeds 10% of the required number of words, deduct 10% from your score. If your assignment obviously fails to meet the required number of words, the paper may be disqualified because you fail to provide the required amount of information.Scoring criteria
| Grade | fraction | describe |
| excellent | 70-100
branch |
60-69 The sub criteria are as follows:
Students' homework shows that students have done extensive reading on related topics.Be able to write complex and standard arguments.Be able to make full use of and understand relevant materials and make appropriate trade-offs between basic facts and key theories.Be able to comment directly on materials and their hypotheses and arguments.Evidence of original thinking, ability to think independently (and take risks). |
| good | 60-69
branch |
There is strong evidence of students' critical thinking.Be able to understand the main facts and theoretical details, and be able to quote relevant literature on the problem.Be able to find out the key points of the problem, give Qinghu's argument, and express and demonstrate with trained logical thinking ability.It can show that students have a clear plan and appropriate choice for the problem source, method, concept and model. |
| pass | 50-59
branch |
Have a certain understanding of the main facts and theories involved.It can show the planning and selection of relevant information sources.Have a certain understanding of the relevant literature.Students can clearly see that their thinking and argumentation have been trained.Be able to write properly and draw conclusions. |
| fail,
(omitted) |
40-49
branch |
Students' homework shows that students know some basic facts and theories and have some understanding, but they can't explain and extend them.Students have obvious digression.There may be relevant or irrelevant materials and arguments in the assignment, but it can be seen that some planning has been made. |
| Poor) | ||
| fail,
(bad) |
40 Below | The student's homework is not able to answer questions, or the arguments raised have nothing to do with the questions.It can not make use of the relevant literature and lack of understanding of the key issues.There are obvious wrong expressions and misunderstandings of concepts and basic facts in the homework. |
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