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FIN 3233 Financial Management 1

Course/ Module:

Financial Management 1

SEGI Course Code: FIN 3233

ASSESSMENT METHODS

Number of Assessments

Form of Assessment

% Weighting

Size of Assessment/Duration/Word count

Category of Assessment

Learning Outcomes being Assessed

5

Alternative Assessment

50%

2,000 words report

Coursework

CLO 3 & 4

1

Case study

35%

1,500 words each

Coursework1

CLO 1 & 2

1

Case study

15%

1,500 words each

Coursework2

CLO 1 & 2

ALTERNATIVE ASSESSMENT QUESTION PAPER

Regulations

Students must submit all materials supporting their assessment listed in the deliverable section.

  • Please make sure that you are aware of the rules concerning plagiarism. If you are unclear about them, please consult your program coordinator/lecturer.

Plagiarism is presenting somebody else’s work as your own. It includes: copying information directly from the Web or books without referencing the material; submitting joint Assessment as an individual effort; copying another student’s Assessment; stealing Assessment from another student and submitting it as your own. Suspected plagiarism will be investigated and if found to have occurred will be dealt with according to the procedures set down by the SEGi University/ UCLAN.

  • Students will have 2 Plagiarism policies in place – double award students the UCLAN Plagiarism policy will override SEGi Plagiarism Policy. The appended table provides the summary of the 2 policies.

UCLAN Plagiarism Policy

SEGi Plagiarism Policy

Single offence – 0 marks – affected assessment to be re-submitted and student can only secure pass mark

Minor Plagiarism: poor in-text referencing and few paragraphs being copied – stern warning and or counseling

Repeat offended – 0 marks and no opportunity to re-submit – student can retake courses

Moderate Plagiarism: copying some paragraphs and results without in-text referencing – awarded next lower grade

Major Plagiarism; Most of the work is copied and cases of repeat minor and major plagiarism – Fail and re-take or suspension or dismissal

  • The Assessment should exhibit formal research skills i.e. with a table of content, proper citations, references, and appendixes.
  • The Assessment write up must be able to demonstrate critical analysis and application of both theory and practical issues to the company that you have selected.
  • Student may include additional relevant data/information apart from the proposed guidelines in conjunction to your research. Additional marks will be awarded for such attempt.
  • All written reports MUST be submitted for similarity checks to Turnitin.
  • Extensions

Authorization of late submission of work requires written permission. Your lecturer is authorized to give permission for one extension period of between 1 and 10 working days where appropriate evidence of good reason has been accepted and where submission within this timescale would be reasonable taking into account your circumstances. Requests for extensions should be made prior to the submission date as extensions cannot be given retrospectively.

SEGi/UCLAN Penalties

Submission within 5 working date following published deadline – given a pass (50 marks for the component of assessment)

Submission later than 5 working days – awarded 0 marks for the component

Unauthorized late submission at supplementary will be automatically be awarded 0 marks for the component assessment

Learning Outcomes tested

Assessment Criteria :

Students must demonstrate the ability to:

  • CLO1: Demonstrate knowledge and understanding of the role and purpose of financial management in the context of present day financial management environment.
  • CLO2: Analyze and utilize information by means of risk and return relationship.
  • CLO3: Analyze and critically appraise the financial statements of limited companies with reference to working capital management in digital environment.
  • CLO4: Structure and present a logical argument – appraising capital investment using a variety of techniques.

§ Work as a group to research, write and structure a report that analyze the implications.

§ Synthesize theoretical material with practical and actual trends to generate proper discussions and critique.

§ Apply critical thinking, analytic, communication and team building skills through interview, problem solving and discussions.

ALTERNATIVE ASSESSMENT QUESTIONS

Answer all the FIVE (5) questions.

You have been appointed as the Finance Manager of Bright Star Bhd, a public listed SME company on Bursa Malaysia security market. The company was listed five years ago. Now, the board of directors planning for next wave of growth. As a finance manager you are evaluating an investment project. You are required to prepare a comprehensive report explaining the application of numerous methods for valuing investment project for the board of directors’ strategic decision. The is considering of issuing new ordinary stock, new preferred stock, new bonds and utilizing retained earnings. Your finance department have gathered formation to evaluate viability of the projects. Corporate tax stands at 28%. (This rate applies to all the investment and financing decision made by the company)

Company related information:

  1. Current dividend for the company’s ordinary stock is RM1.00 and dividend growth rate is 3.0%. The company will issue new ordinary stock at RM12.00 per share. Flotation cost of 2.5%.
  2. The company will issue new preferred stock at RM9.00 each with a flotation cost of 4.5%. Preferred stock dividend will be RM1.20
  3. The company’s bond is paying 6% coupon payment.
  4. Bright Star Bhd’s capital structure comprising:

Ordinary shares 3,600,000

Preferred shares 1,400,000

Bonds 3,000,000

Retained earnings. 3,000,000

  1. The company has identified TWO investment projects. The details are as follows.

Investment project related information:

Name of project: Project E ($20,000 Investment cost)

Year Cash Flow

1 ........................... $ 5,500

2 ........................... 6,500

3 ........................... 8,000

4 ........................... 10,000

5 ........................... 13,000

6 ........................... 15,000

7 ........................... 17,000

Name of project: Project H ($20,000 Investment cost)

Year Cash Flow

1 ........................... $17,000

2 ........................... 15,000

3 ........................... 13.000

4 ........................... 9,000

5 ........................... 6.000

REQUIRED:

QUESTION 1

Based on the available information, you are required to compute weighted average cost of capital (WACC) for the Bright Star Bhd. Provide detailed workings for all the relevant components involved.

(Total 19 marks)

QUESTION 2

Discuss FOUR (4) advantages of using WACC as cost of Funding compared to any other rates. Answer must supported by relevant academic evidence.

(Total 8 marks)

QUESTION 3

The following questions apply corporate tax and depreciation based on straight line method, assume zero residual value.

  1. Determine the net present value of the ‘Projects E’ and ‘Project H’ based on a zero discount rate.

(12 marks)

  1. Determine the net present value of the ‘Projects E’ and ‘Project H’ based on a 9 percent discount rate

(6 marks)

  1. Compute the internal rate of return on Project E and the internal rate of return on Project H using interpolation method. Graph a net present value profile (draw in excel spread sheet) for the two investments using appropriate scale on vertical and horizontal axis.

(12 marks)

  1. If the two projects are independent in nature, what would your acceptance or rejection decision be if the discount rate is 8 percent? (Use the net present value profile for your decision; no actual numbers are necessary).

(4 marks)

  1. If the two projects are mutually exclusive, what would be your decision if the cost of capital is:

(1) 12 percent,

(2) 15 percent,

(3) 18 percent

(4 marks)

(Total 38 marks)

QUESTION 4

Critically analyze advantages and disadvantages between NPV and IRR for investment decision. (Provide evidence from any Five (5) academic journals).

(Total 25 marks)

QUESTION 5

Prepare an executive summary and recommendation to the Board of Directors on investment projects of Bright Star Bhd.

(Executive summary should cover: objective of the report, investment project being considered, sources of financing considered, outcome of the investment appraisal based various capital budgeting techniques applied and recommendation to Bright Star Bhd).

(Total 10 marks)

(Grand Total 100 marks)

Note:

Refer Appendix 1 for the remaining marks allocation.

The total marks for this question is 100% but it carries 50% of overall question for this module.

* The detailed marking criteria’s for the allocation of 100 marks is provided in Appendix 1

LENGTH REQUIRED

2000 words +/- 10%. Any deviation from this will be penalized.

FORMATTING AND LAYOUT

  • A Microsoft Office Word Document or other relevant applications as permitted by module lecturer/ typed using computer. Usage of typewriter or hand - written is STRICTLY not allowed.
  • 12 font size, Time New Roman font and bold title and sub titles
  • A4 sized paper
  • Fully justified alignment
  • 1½ line spacing
  • Margins of 1” at top and bottom; left and right
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