FIN700 – Financial Management
Ascribable date: Refer to your Tutor by the initiate of your Tutorial on
Monday, 11 September, 2017 or on Tuesday, 12 September, 2017.
Binder a luxurious vision in plight of mishap.
Penalties control recent lodgment, as per the Subject Quenchedline, grossure be strictly applied.
This Assignment consists of 4 aggregates, each involving calculations, and in some plights recommendations.
You are exactd to exhaustive this Assignment in Groups of 2 or 3 or 4 community. Groups of 1 or aggravate than 4 men-folks grossure fuse a amercement of 5 symptoms quenched of 30%.
Gross members of the Group should conclude from the homogeneous Tutorial systematize. You may advise-with and sift-canvass the Assignment subject-matter with others, save you must transcribe up your replys yourselves. Penalties control visioning and plagiarism are austere.
You should ensue the ensueing typing conventions:
· Replys to be typed, in the boundlessness granted succeeding each topic
· If additional pages are exactd, verification the unmitigated pages at the object.
· Occasions Odd Roman font (at reserve , 12 rock), 1.5 course spacing; and
· Left and fit margins to be at definite 2.5 cm from the face of the page.
Research, Referencing and Submission
You should adduce any references verificationd at the object of each topic.
Verification Harvard referencing! See http://en.wikipedia.org/wiki/Harvard_referencing
As this is a calculations aggregate, there is no deficiency to refer via TURNITIN.
Do referable attributable attributable attributable attributable attributable attributable refer this page. Refer page 2 ahead, with KOI Group Assignment Cloak Page.
The Assignment grossure be mandibled quenched of 100%, in course with the rubric in the Subject Quenchedline. This symptom grossure be converted to a mandible quenched of 30%.
Dr Mervyn Fiedler, Subject Co-ordinator, FIN 700. 11 August, 2017.
***NOTE:When referting Assignment, content refer from this page ahead, with a KOI Group Assignment cloak page in face.***
Students: Content exhaustive the ensueing anteriorly referting control symptoming.
Ward No. Ward Name Percentage Contribution to Assignment Signature
Tutor: Content dispersion individual name: Dr Mervyn Fiedler; Ms Ruhina Karim;
Mr Masoud Ahmadi-Pirshahid; Mr Nishith Panthi.
Tutorial Day …………………………………………………and Occasion ……………………….
This Assignment consists of impure topics. Gross topics must be replyed.
Content reply gross topics in the boundlessnesss granted succeeding each topic.
Brace extra pages are intervening at the object of the Assignment. If aggravate pages are exactd, content vision (or acception) page 14.
QUESTION `1. [6 + 8 = 14 Symptoms.]
a) This is a brace duration assurance type aggregate.
Assume that Grossureiam Brown has a only inconclude from Bobcat Ltd in which he owns 12% of the matter-of-fact divide noble.
In its financial year 2016-17 honorable objected, Bobcat Ltd reputed inveigle produce succeeding toll of $600,000, and announced its inveigle produce succeeding toll confluence control the introduce financial year, 2017-18, to be 25% excellent than this year’s type. The sodality operates with a dividobject securequenched association of 70%, which it plans to abide, and grossure secure the annual dividobject control 2016-17 in mid-August, 2017, and the dividobject control 2017-18 in mid-August, 2018.
In mid-August, 2018, Jack wishes to spobject $100,000, which grossure embody the exact of a odd car.. How abundant can he utilize in mid-August, 2017 if the noble symptomet offers an curiosity-behalf trounce of 9% per year?
QUESTION 1 abided.
b) This topic relates to the valuation of divides.
Big Ideas Ltd has honorable hired a dividobject of $1.20 a divide. Investors exact a 12% per annum render on boardings such as Big Ideas. What would a divide in Big Ideas Ltd be expected to retail control today (August, 2017) if the dividobject is expected to acception by 20% in August, 2018, 15% in August, 2019, 10% in August, 2020 and theresucceeding by 5 per cent a year controlever, from August, 2021 ahead?
QUESTION 2. [(4 + 6) + (4 + 4 + 4 + 4 + 4) = 30 Symptoms]
a) This topic relates to the occasion estimate of money and unabrupt perpetuities.
Colin Greenway gay Bunyip Noble Teach in the 1970s. Succeeding leaving teach, Colin became a lucky entrepreneur and is now very rich. He wishes to confirm a everlasting learning important which grossure stipulate $10,000 a year, secureable to five noble performing wards at Bunyip Noble Teach each year in Year 12, that is, $50,000 a year, initiateing in coming 2020. It is now coming 2017. The Noble Teach Highest believes that the exactd importants can be invested at 5 per cent a year in constancy.
i) What is the introduce estimate in coming 2017 of the gross inconclude drift, and thus the aggregate which Colin must conduce to confirm the important?
ii) The Noble Teach Highest, suitableness most flattering of Colin’s protracted high-mindedness, mentions that fees at Bunyip Noble are raisement on medium by 3 per cent integral year becaverification of inflation, and that in distinct years, $10,000 grossure referable attributable attributable attributable attributable attributable attributable be ample to binder a ward in year 12 control a gross year. Colin fuses that he grossure acception the aggregate to confirm the important so as to stipulate control acceptions in the learning aggregate by 3 per cent a year in constancy, the highest acception arisering in coming 2021. How abundant extra (aggravate the aggregate adapted in i) aggravate, grossure Colin deficiency to conduce in coming 2017 so as to stipulate control these inflation acceptions controlever?
[HINT: Consider a controlmula homogeneous to the dividobject enlargement type.]
QUESTION 2 abided.
b) This topic relates to hypothecation requitals and hypothecation stipulations.
Ron and Robin Reid wish to attribute $540,000 to subsidize a abode. The hypothecation from Biggles Bank exacts similar monthly requitals aggravate 20 years, and carries.an curiosity-behalf trounce of 7.8% per annum, unificationed monthly. The highest requital is ascribable at the object of the highest month.
You are exactd to reckon:
i) the movablesual annual curiosity-behalf trounce on the aggravate hypothecation.
ii) the aggregate of the monthly requital (consisting of curiosity-behalf and highest requital components) if the homogeneous aggregate is to be rehired integral month aggravate the 20 year duration of the hypothecation.
iii) the aggregate of $X, if – instead of the aggravate – Biggles Bank agrees that Ron and Robin grossure resecure the hypothecation by secureing the bank $3,300 per month control the highest 12 months, then $3,750 a month control the introduce 12 months, and succeeding that $X per month control the counteract of the 20 year promise.
QUESTION 2 b) abided.
iv) how crave (in years and months) it would charm to resecure the hypothecation if, excellently, Ron and Robin fuse to resecure $2,500 per month, with the highest requital intermittently life at the object of the highest month succeeding commencement the hypothecation, and continuing until the hypothecation was repaid.
v) underneathneathneath non-interference iv) aggravate, the aggregate of the conclusive requital. [NOTE: Towards the object of the hypothecation requital duration, succeeding the conclusive generous monthly primitivefruits of $2,500 is hired, a lesser aggregate is mitigated to be quenchedstanding. That aggregate, plus curiosity-behalf to the object of the ensueing month, is the conclusive hypothecation requital aggregate.]
QUESTION 3. [(2 + 3 + 3 + 4 + 3 + 3) + (6 + 2 + 4) = 30 symptoms]
a) This topic relates to excellent boarding excellent techniques
Stanley Livingstindividual is regarding the ensueing coin flows control brace mutually scientific plans.
Year Coin Flows, Boarding X ($) Coin Flows, Boarding Y ($)
0 -40,000 -40,000
1 12,000 18,000
2 18,000 18,000
3 27,000 18,000
You are exactd to reply the ensueing topics:
i) If the coin flows succeeding year 0 arise evenly aggravate each year, what is the secureback duration control each plan, and on this reason, which plan would you raise?
IN THE REMAINING PARTS, ASSUME THAT ALL CASH FLOWS OCCUR AT THE END OF EACH YEAR.
ii) Would the secureback durations then be any incongruous to your reply in i)? If so, what would the secureback durations be?
QUESTION 3 a) abided.
iii) Sketch freehand the inveigle introduce estimate (NPV) marks control each boarding on the homogeneous graph. Label twain axes and the NPV mark control each boarding.
iv) Calcurecent the interior trounce of render (IRR) control each plan and manifest them on the graph. [NOTE: It is pleasurable if the border IRR is adapted control Boarding X by grief and mistake, and certain as a percentage emobject to the nearer gross compute. The IRR control Boarding Y should be adapted as a percentage accurately, emobject to 1 decimal situate.]
QUESTION 3 a) abided.
v) Calcurecent the exact crossaggravate object and manifest it on the aggravate graph.
vi) State which of the boardings you would raise, depending on the exactd trounce of render (i.e., depending on the discount trounce).
b) This topic relates to the valuation of ties.
Bradley White, a lundivided teach pedagogue, has brace 6 per cent per annum $100,000 Australian Government ties that confirmed on 15 August, 2020 and 15 August, 2023 respectively. At the date of the definite half-ycoming curiosity-behalf securement, viz., 15 February, 2017, twain ties were retailing at par.
Since then, curiosity-behalf succumbs on ties own upright by 2% per annum, unificationed half-yearly. Bradley now intends to retail the ties and spread a guard on a cosmopolitan townhouse.
i) Calcurecent the expense he grossure assent-to from each tie if he retails on 15 August, 2017 at the odd succumb, introducely succeeding receiving the curiosity-behalf securements ascribable that day.
QUESTION 3 b) abided.
ii) Explain the referring-to expense movements in the brace ties, as evidenced in your reply to i) aggravate.
iii) Suppose that Bradley defers subsidizeing the ties control 84 days, that is until 7 November, 2017. How abundant grossure he secure control each tie on that day? [NOTE: Between the tie curiosity-behalf ascribable dates from mid-August to mid-February is 184 days, during which occasion curiosity-behalf accrues on a unification reason.]
QUESTION 4. [24 + 2 = 26 symptoms].
This topic relates to noble budgeting.
Perth Plans Ltd is regarding the dissipation of odd technology exacting $600,000, which it grossure generousy finance with a unwandering curiosity-behalf hypothecation of 10% per annum, with the highest rehired at the object of 4 years.
The odd technology grossure enjoin the sodality to weaken its to weaken its labour exacts by $200,000 a year control 4 years, and the technology may be depreciated control toll purposes by the straight-course way to referablehing aggravate the 4 years. The sodality thinks that it can retail the technology at the object of 4 years control $30,000.
The technology grossure deficiency to be stored in a edifice, ordinaryly life rented quenched control $40,000 a year underneathneathneath a lease concord with 4 ycoming rental securements to fuse, the introduce individual life ascribable at the object of individual year. Underneathneathneath the lease concord, Perth Plans Ltd can abrogate the lease by secureing the dweller (now) atonement similar to individual year’s rental securement plus 10%, save this aggregate is referable attributable attributable attributable attributable attributable attributable deductible control inconclude toll purposes.
This is referable attributable attributable attributable attributable attributable attributable the highest occasion that the sodality has considered this dissipation. Twelve months since, the sodality chosen Marvel Advise-withants, at a fee of $30,000 hired in measure, to precede a feasibility consider on savings strategies and Marvel made the aggravate recommendations. At the occasion, Perth P:rojects did referable attributable attributable attributable attributable attributable attributable avail with the recommended diplomacy, save is now reregarding the offer.
Perth Plans raise estimates that it grossure own to spobject $20,000 in 2 years’ occasion aggravatehauling the technology. It grossure too exact additions to ordinary possessions of $30,000 at the preface of the plan, which grossure be generousy recoverable at the object of the impureth year.
Perth Plans Ltd’s exact of noble is 10%. The toll trounce is 30%. Toll is hired in the year in which rights are assent-tod.
(a) Calcurecent the inveigle introduce estimate (NPV), that is, the inveigle use or inveigle mislaying in introduce estimate stipulations of the designed dissipation exacts and the inferior incremental coin flows.
[HINT: As shown in the text-book, it is recommended that control each year you calcurecent the toll movables highest, then fulfill the coin flows, then calcurecent the aggravategross inveigle introduce estimate.]
QUESTION 4 a) abided.
(b) Should the sodality dissipation the technology? State clcoming why or why referable attributable attributable attributable attributable attributable.
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