Reference no: EM132992714 , Length: word count:3000

HI5002 Finance for Business - Reflective Journal, Fact Finding of Financial Market and Capital Budgeting Analysis

Analyse and conduct academic work within the topics of financial management

I. Assignment Tasks

This assignment task is a written report that include 3 parts:

Part 1: Reflective journal of one selected topic among 9 first topics of the course.
Part 2: Fact finding of securities investment practices in Australia.
Part 3: Capital Budgeting and Project Evaluation.

Introduction
A brief introduction of your group's work: the purpose of assignment, key findings and structure of the assignment (not more than 150 words)

Part 1. Reflective journal of a selected topic among 9 first topics of the course

Your group is required to write a reflective journal about what you had learnt in an interactive tutorial session or a face to face class that covers one selected topic among 9 first topics of HI5002 course. Please note below the requirements for this part to be marked before answer the questions:

1) Correct name of the topic as per syllabus, lectures and tutorials must be provided
2) Correct time, date and name of the lecturer who delivered the interactive tutorial session/face to face class should be provided.
3) Evidence of your discussion with your lecturer about one question related to the chosen topic.

To complete the reflective journal, answer the following reflective questions:

Reflective questions:

Question 1: What are the financial concepts you have learnt in the class? Briefly explain the concepts? (please note that only list the financial concepts discussed in the interactive tutorial session/ face to face class, not all the financial concepts discussed in the recorded lecture)

Question 2: What are the important issues your lecturer reminded you to note down and pay your special attention to regarding the financial concepts/formulas/calculations/skills/techniques you have learnt in that class?

Question 3: How many practice questions did you work on the class with your lecturer? Briefly summarize the content of that questions and what you have done with your lecturer in practicing with those questions. What are the problems did you encounter when you worked on that practice questions?

Question 4: How can you potentially apply what you have learnt in that class in your real life?

Question 5: What question did you ask your lecturer in the class, what is your lecturer's answer and your discussion aftermath?

Part 2. Fact finding of securities investment practice in Australia

You are required to go to Online Portals of ASX and ASIC, explore the data and information in the portals and perform the following tasks:

Task 1: Read and briefly summarize contents of 3 brochures provided by ASX to investors. Students are required to sit the face to face or online class in week 9 to get the guidance from lecturers about which ASX brochures they need to describe in this Part.

Task 2: Attend and briefly describe the content of 3 modules of ASX online courses provided to securities investors for investor education. Students are required to sit the face to face or online class in week 9 to get the guidance from lecturers about which online course modules they need to describe in this Part.

Task 3: Search for information in the ASIC consumers portal and answer two questions assigned to your group. Students are required to sit the face to face or online class in week 9 to get the guidance from lecturers about the questions your group will need to answer in this Task

Task 4: Search the relevant information about setting up business structure in the website of ASIC and briefly describe the steps for you to set a business organization. Students are required to sit the face to face or online class in week 9 to get the guidance from lecturers about the type of business organization your group will need to work on in this Task

Part 3: Capital Budgeting and Project Evaluation

3.1. Capital Budgeting Decision Making

Case Study: Assume that your group is working in Finance Department of a construction company. Your company is considering the potential project as follow:

Launching a new construction project. There are two options available for the company management's consideration. Option 1 is building an apartment in the city centre and option 2 is building a new residential community in a suburban area. It is estimated that within five years, the company can gradually build up and sell all the properties in two options. The company is currently facing soft capital rationing. The table below shows the estimated cash flow available to the company's Management:

	Option 1	Option 2
Initial Investment	12,235,000	16,215,000
Annual cash inflow
Year 1	4,390,000	5,315,000
Year 2	4,320,000	6,345,000
Year 3	5, 360,000	6,356,000
Year 4	5,375,000	5,402,000
Year 5	4,480,000	5,540,000

You are required to write a short report to the company's Management:

1) To select a relevant method among five investment criteria of Net Present Value (NPV), Equivalent Annual Cost (EAC), profitability Index (PI), Internal Rate of Return (IRR), Simple Payback Period, and Discounted Payback Period for this project, given the market required rate of return for all project is 12.5% and the company's benchmark of payback is maximum 3 years. Your recommendation must include your justification on why you choose the specific method based on its pros and cons compared to other methods and the financial circumstance of the company. (2 marks)
2) To perform the selected method and present the outcome of your project evaluation and recommend the option 1 or 2 should the company choose for this project. Your justification must include calculation steps and numerical outcomes. (5 marks)

Students are compulsorily required to sit the face to face or online class in week 8 to know how to work on these capital budgeting questions with correct terminologies, templates and calculations.

3.2. Risk Analysis and Project Evaluation: NPV Sensitivity Analysis (8 marks)

Case Study: Assume that your group is working in Finance Department of a production company. Your company is considering to buy a new assembly line for launching a new product. With the new assembly line, the company expects to sell 6,500 products/ year for an average price of $350 per unit for 5 years. The new assembly line has the initial cost of $1,550,000, a residual value of $250,000 at the end of the project. The company will need to add $450 000 in working capital which is expected to be fully retrieved at the end of the project. Other information is available below:

Depreciation method: straight line
Variable cost per unit: $190
Cash fixed costs per year: $200,000
Corporate marginal tax: 30%

Upon the forecast of unexpected economic conditions that may be caused by the current breakout of corona virus, the company management requires your Team to prepare a risk analysis for the case where:

Unit sales decrease by 15% Price per unit decreases by 15%
Variable cost per unit increases 15%
Cash fixed cost per year increases by 15%

Required: Do an analysis with cash flows of the project to determine the sensitivity of the project NPV with the above estimated changes in the value drivers and provide your results in relevant tables.

Conclusion
Summarize / Reflection the outcomes of your group's works (not more than 150 words)

Attachment:- Finance for Business.rar