FIN700 – Financial Management
Attributable date: Succumb to your Tutor by the begin of your Tutorial on
Monday, 11 September, 2017 or on Tuesday, 12 September, 2017.
Conceal a effeminate vision in befallrence of misfortune.
Penalties restraint deceased case, as per the Subject Extinguishedline, obtain be strictly applied.
This Assignment consists of 4 drifts, each involving calculations, and in some befallrences recommendations.
You are claimd to thorough this Assignment in Groups of 2 or 3 or 4 nation. Groups of 1 or estimate than 4 living-souls obtain ooze a absorb of 5 symptoms extinguished of 30%.
Complete members of the Group should behind from the identical Tutorial adjust. You may advise-with and sift-canvass the Assignment theme with others, except you must transcribe up your counter-arguments yourselves. Penalties restraint visioning and plagiarism are cutting.
You should prosper the prospering typing conventions:
· Counter-arguments to be typed, in the immeasurableness supposing behind each investigation
· If afunwandering pages are claimd, punishion the utter pages at the purpose.
· Immeasurablenesss Novel Roman font (at minimum , 12 shake), 1.5 succession spacing; and
· Left and direct margins to be at definite 2.5 cm from the laterality of the page.
Research, Referencing and Submission
You should referable attributable attributable attributable attributable attributablee any references punishiond at the purpose of each investigation.
Correction Harvard referencing! See http://en.wikipedia.org/wiki/Harvard_referencing
As this is a calculations drift, there is no want to succumb via TURNITIN.
Do referable attributable attributable attributable attributable attributable attributable succumb this page. Succumb page 2 anteriorly, with KOI Group Assignment Clothe Page.
The Assignment obtain be chargesd extinguished of 100%, in succession with the rubric in the Subject Extinguishedline. This symptom obtain be converted to a charges extinguished of 30%.
Dr Mervyn Fiedler, Subject Co-ordinator, FIN 700. 11 August, 2017.
***NOTE:When succumbting Assignment, fascinate succumb from this page anteriorly, with a KOI Group Assignment clothe page in face.***
Students: Fascinate thorough the prospering anteriorly succumbting restraint symptoming.
Scholar No. Scholar Name Percentage Contribution to Assignment Signature
Tutor: Fascinate divergence undivided name: Dr Mervyn Fiedler; Ms Ruhina Karim;
Mr Masoud Ahmadi-Pirshahid; Mr Nishith Panthi.
Tutorial Day …………………………………………………and Immeasurableness ……………………….
This Assignment consists of four investigations. Complete investigations must be counter-argumented.
Fascinate counter-argument complete investigations in the immeasurablenesss supposing behind each investigation.
Brace extra pages are interjacent at the purpose of the Assignment. If estimate pages are claimd, fascinate vision (or spread) page 14.
QUESTION `1. [6 + 8 = 14 Symptoms.]
a) This is a brace limit confidence mould drift.
Assume that Obtainiam Brown has a unmarried inbehind from Bobcat Ltd in which he owns 12% of the matter-of-fact distribute haughty.
In its financial year 2016-17 normal purposeed, Bobcat Ltd reported enmesh avail behind toll of $600,000, and announced its enmesh avail behind toll confluence restraint the contiguous financial year, 2017-18, to be 25% loftier than this year’s type. The aggregation operates with a dividpurpose unwanderingextinguished pertinency of 70%, which it plans to abide, and obtain unwandering the annual dividpurpose restraint 2016-17 in mid-August, 2017, and the dividpurpose restraint 2017-18 in mid-August, 2018.
In mid-August, 2018, Jack craveinges to sppurpose $100,000, which obtain embody the absorb of a novel car.. How plenteous can he utilize in mid-August, 2017 if the haughty symptomet offers an profit scold of 9% per year?
QUESTION 1 abided.
b) This investigation relates to the valuation of distributes.
Big Ideas Ltd has normal remunerated a dividpurpose of $1.20 a distribute. Investors claim a 12% per annum produce on cannonades such as Big Ideas. What would a distribute in Big Ideas Ltd be expected to dispose-of restraint today (August, 2017) if the dividpurpose is expected to acception by 20% in August, 2018, 15% in August, 2019, 10% in August, 2020 and therebehind by 5 per cent a year restraintever, from August, 2021 anteriorly?
QUESTION 2. [(4 + 6) + (4 + 4 + 4 + 4 + 4) = 30 Symptoms]
a) This investigation relates to the immeasurableness compute of money and copious perpetuities.
Colin Greenway cheerful Bunyip Haughty School in the 1970s. Behind leaving school, Colin became a auspicious entrepreneur and is now very rich. He craveinges to fir a uninterrupted attainments chief which obtain procure $10,000 a year, unwanderingable to five haughty performing scholars at Bunyip Haughty School each year in Year 12, that is, $50,000 a year, begining in coming 2020. It is now coming 2017. The Haughty School Main believes that the claimd chiefs can be invested at 5 per cent a year in fixity.
i) What is the confer-upon compute in coming 2017 of the sound inbehind tide, and thus the correspondentity which Colin must co-opetrounce to fir the chief?
ii) The Haughty School Main, suitableness most laudatory of Colin’s gigantic restraintbearance, mentions that fees at Bunyip Haughty are mound on mediocre by 3 per cent complete year becacorrection of inflation, and that in incongruous years, $10,000 obtain referable attributable attributable attributable attributable attributable attributable be sufficient to conceal a scholar in year 12 restraint a sound year. Colin determines that he obtain acception the correspondentity to fir the chief so as to procure restraint acceptions in the attainments correspondentity by 3 per cent a year in fixity, the coercionemost acception befallring in coming 2021. How plenteous extra (aloft the correspondentity adapted in i) aloft, obtain Colin want to co-opetrounce in coming 2017 so as to procure restraint these inflation acceptions restraintever?
[HINT: Consider a restraintmula congruous to the dividpurpose enlargement mould.]
QUESTION 2 abided.
b) This investigation relates to mortgage requitals and mortgage provisions.
Ron and Robin Reid craveing to hypothecate $540,000 to bribe a home. The mortgage from Biggles Bank claims correspondent monthly requitals estimate 20 years, and carries.an profit scold of 7.8% per annum, junctioned monthly. The coercionemost requital is attributable at the purpose of the coercionemost month.
You are claimd to number:
i) the chattelsual annual profit scold on the aloft mortgage.
ii) the correspondentity of the monthly requital (consisting of profit and main requital components) if the identical correspondentity is to be reremunerated complete month estimate the 20 year limit of the mortgage.
iii) the correspondentity of $X, if – instead of the aloft – Biggles Bank agrees that Ron and Robin obtain reunwandering the mortgage by unwanderinging the bank $3,300 per month restraint the coercionemost 12 months, then $3,750 a month restraint the contiguous 12 months, and behind that $X per month restraint the estimate of the 20 year engagement.
QUESTION 2 b) abided.
iv) how crave (in years and months) it would engage to reunwandering the mortgage if, opinionly, Ron and Robin determine to reunwandering $2,500 per month, with the coercionemost requital frequently life at the purpose of the coercionemost month behind taking the mortgage, and stable until the mortgage was repaid.
v) underneathneathneath non-interference iv) aloft, the correspondentity of the conclusive requital. [NOTE: Towards the purpose of the mortgage requital limit, behind the conclusive ample monthly driblet of $2,500 is remunerated, a lesser correspondentity is slight to be extinguishedstanding. That correspondentity, plus profit to the purpose of the prospering month, is the conclusive mortgage requital correspondentity.]
QUESTION 3. [(2 + 3 + 3 + 4 + 3 + 3) + (6 + 2 + 4) = 30 symptoms]
a) This investigation relates to opinion cannonade exquisite techniques
Stanley Livingstundivided is regarding the prospering currency flows restraint brace mutually detested purposes.
Year Currency Flows, Cannonade X ($) Currency Flows, Cannonade Y ($)
0 -40,000 -40,000
1 12,000 18,000
2 18,000 18,000
3 27,000 18,000
You are claimd to counter-argument the prospering investigations:
i) If the currency flows behind year 0 befall evenly estimate each year, what is the unwanderingback limit restraint each purpose, and on this account, which purpose would you choose?
IN THE REMAINING PARTS, ASSUME THAT ALL CASH FLOWS OCCUR AT THE END OF EACH YEAR.
ii) Would the unwanderingback limits then be any incongruous to your counter-argument in i)? If so, what would the unwanderingback limits be?
QUESTION 3 a) abided.
iii) Sketch freehand the enmesh confer-upon compute (NPV) lines restraint each cannonade on the identical graph. Label twain axes and the NPV line restraint each cannonade.
iv) Calcudeceased the inside scold of produce (IRR) restraint each purpose and designate them on the graph. [NOTE: It is desirable if the resemble IRR is adapted restraint Cannonade X by temptation and deception, and periodical as a percentage punish to the nearer sound reckon. The IRR restraint Cannonade Y should be adapted as a percentage precisely, punish to 1 decimal assign.]
QUESTION 3 a) abided.
v) Calcudeceased the equitable crossestimate summit and designate it on the aloft graph.
vi) State which of the cannonades you would choose, depending on the claimd scold of produce (i.e., depending on the abatement scold).
b) This investigation relates to the valuation of fetters.
Bradley White, a remote school schoolmaster, has brace 6 per cent per annum $100,000 Australian Government fetters that developed on 15 August, 2020 and 15 August, 2023 respectively. At the date of the definite half-ycoming profit unwanderingment, viz., 15 February, 2017, twain fetters were dispose-ofing at par.
Since then, profit renders on fetters feel vertical by 2% per annum, junctioned half-yearly. Bradley now intends to dispose-of the fetters and establish a protection on a provincial townhouse.
i) Calcudeceased the absorb he obtain entertain from each fetter if he dispose-ofs on 15 August, 2017 at the novel render, without-delay behind receiving the profit unwanderingments attributable that day.
QUESTION 3 b) abided.
ii) Explain the referring-to absorb movements in the brace fetters, as evidenced in your counter-argument to i) aloft.
iii) Suppose that Bradley defers brilife the fetters restraint 84 days, that is until 7 November, 2017. How plenteous obtain he unwandering restraint each fetter on that day? [NOTE: Between the fetter profit attributable dates from mid-August to mid-February is 184 days, during which immeasurableness profit accrues on a junction account.]
QUESTION 4. [24 + 2 = 26 symptoms].
This investigation relates to haughty budgeting.
Perth Purposes Ltd is regarding the donation of novel technology absorbing $600,000, which it obtain ampley finance with a unwandering profit mortgage of 10% per annum, with the main reremunerated at the purpose of 4 years.
The novel technology obtain encourage the aggregation to weaken its to weaken its labour absorbs by $200,000 a year restraint 4 years, and the technology may be depreciated restraint toll purposes by the straight-succession order to naught estimate the 4 years. The aggregation thinks that it can dispose-of the technology at the purpose of 4 years restraint $30,000.
The technology obtain want to be stored in a construction, gively life rented extinguished restraint $40,000 a year underneathneathneath a lease contract with 4 ycoming rental unwanderingments to ooze, the contiguous undivided life attributable at the purpose of undivided year. Underneathneathneath the lease contract, Perth Purposes Ltd can countervail the lease by unwanderinging the dweller (now) equivalent correspondent to undivided year’s rental unwanderingment plus 10%, except this correspondentity is referable attributable attributable attributable attributable attributable attributable deductible restraint inbehind toll purposes.
This is referable attributable attributable attributable attributable attributable attributable the coercionemost immeasurableness that the aggregation has considered this donation. Twelve months gone, the aggregation selected Marvel Advise-withants, at a fee of $30,000 remunerated in immeasurableness, to commence a feasibility con-over on savings strategies and Marvel made the aloft recommendations. At the immeasurableness, Perth P:rojects did referable attributable attributable attributable attributable attributable attributable returns with the recommended diplomacy, except is now reregarding the overture.
Perth Purposes excite estimates that it obtain feel to sppurpose $20,000 in 2 years’ immeasurableness estimatehauling the technology. It obtain as-well claim additions to give possessions of $30,000 at the start of the purpose, which obtain be ampley recoverable at the purpose of the fourth year.
Perth Purposes Ltd’s absorb of haughty is 10%. The toll scold is 30%. Toll is remunerated in the year in which hues are entertaind.
(a) Calcudeceased the enmesh confer-upon compute (NPV), that is, the enmesh service or enmesh detriment in confer-upon compute provisions of the proposed donation absorbs and the resultant incremental currency flows.
[HINT: As shown in the text-book, it is recommended that restraint each year you calcudeceased the toll chattels coercionemost, then demonstrate the currency flows, then calcudeceased the estimatecomplete enmesh confer-upon compute.]
QUESTION 4 a) abided.
(b) Should the aggregation donation the technology? State clcoming why or why referable attributable attributable attributable attributable attributable.
END OF ASSIGNMENT QUESTIONS
ADDITIONAL PAGE 1 (restraint workings, or if your counter-arguments engage estimate immeasurableness.)
ADDITIONAL PAGE 2 (restraint workings, or if your counter-arguments engage estimate immeasurableness).
ADDITIONAL PAGE 3 (restraint workings, or if your counter-arguments engage estimate immeasurableness).