FIN700 – Financial Management
Attributable era: Surrender to your Tutor by the roauthentication of your Tutorial on
Monday, 11 September, 2017 or on Tuesday, 12 September, 2017.
Detain a feeling representation in circumstance of failure.
Penalties coercion deceased magazine, as per the Subject Extinguishedline, conquer be strictly applied.
This Assignment consists of 4 heights, each involving calculations, and in some circumstances recommendations.
You are demandd to consummate this Assignment in Groups of 2 or 3 or 4 herd. Groups of 1 or past than 4 individuals conquer meet a fare of 5 traces extinguished of 30%.
Generous members of the Group should succeeding from the alike Tutorial adjust. You may delibereprimand and argue the Assignment subject with others, yet you must transcribe up your replys yourselves. Penalties coercion representationing and plagiarism are caustic.
You should prosper the prospering typing conventions:
· Replys to be typed, in the interval supposing succeeding each topic
· If subjoined pages are demandd, authentication the utter pages at the purpose.
· Spells Innovating Roman font (at restriction , 12 roll), 1.5 verse spacing; and
· Left and proportioned margins to be at smallest 2.5 cm from the laterality of the page.
Research, Referencing and Submission
You should repeat any references authenticationd at the purpose of each topic.
Authentication Harvard referencing! See http://en.wikipedia.org/wiki/Harvard_referencing
As this is a calculations height, there is no deficiency to surrender via TURNITIN.
Do referable surrender this page. Surrender page 2 ahead, with KOI Group Assignment Shelter Page.
The Assignment conquer be beakd extinguished of 100%, in verse with the rubric in the Subject Extinguishedline. This trace conquer be converted to a beak extinguished of 30%.
Dr Mervyn Fiedler, Subject Co-ordinator, FIN 700. 11 August, 2017.
***NOTE:When surrenderting Assignment, gladden surrender from this page ahead, with a KOI Group Assignment shelter page in front.***
Students: Gladden consummate the prospering anteriorly surrenderting coercion traceing.
Student No. Student Name Percentage Contribution to Assignment Signature
Tutor: Gladden divergence individual name: Dr Mervyn Fiedler; Ms Ruhina Karim;
Mr Masoud Ahmadi-Pirshahid; Mr Nishith Panthi.
Tutorial Day …………………………………………………and Spell ……………………….
This Assignment consists of lewd topics. Generous topics must be replyed.
Gladden reply generous topics in the intervals supposing succeeding each topic.
Span extra pages are interposed at the purpose of the Assignment. If past pages are demandd, gladden representation (or expand) page 14.
QUESTION `1. [6 + 8 = 14 Traces.]
a) This is a span continuance unquestionableness pattern height.
Assume that Conqueriam Brown has a sole insucceeding from Bobcat Ltd in which he owns 12% of the plain divide primary.
In its financial year 2016-17 proportioned purposeed, Bobcat Ltd reported entoil receipts succeeding reprimand of $600,000, and announced its entoil receipts succeeding reprimand expectancy coercion the proximate financial year, 2017-18, to be 25% promoteable than this year’s illustration. The troop operates with a dividpurpose secureextinguished referring-to of 70%, which it plans to live, and conquer secure the annual dividpurpose coercion 2016-17 in mid-August, 2017, and the dividpurpose coercion 2017-18 in mid-August, 2018.
In mid-August, 2018, Jack effortes to sppurpose $100,000, which conquer conceive the devour of a innovating car.. How abundantly can he devour in mid-August, 2017 if the primary traceet offers an concern reprimand of 9% per year?
QUESTION 1 lived.
b) This topic relates to the valuation of divides.
Big Ideas Ltd has proportioned hired a dividpurpose of $1.20 a divide. Investors demand a 12% per annum restore on sieges such as Big Ideas. What would a divide in Big Ideas Ltd be expected to hawk coercion today (August, 2017) if the dividpurpose is expected to extension by 20% in August, 2018, 15% in August, 2019, 10% in August, 2020 and theresucceeding by 5 per cent a year coercionever, from August, 2021 ahead?
QUESTION 2. [(4 + 6) + (4 + 4 + 4 + 4 + 4) = 30 Traces]
a) This topic relates to the spell prize of currency and extended perpetuities.
Colin Greenway attended Bunyip Proud Discipline in the 1970s. Succeeding leaving discipline, Colin became a cetunate entrepreneur and is now very rich. He effortes to substantiate a uninterrupted erudition cardinal which conquer submit $10,000 a year, secureable to five proud performing students at Bunyip Proud Discipline each year in Year 12, that is, $50,000 a year, rouseing in cethcoming 2020. It is now cethcoming 2017. The Proud Discipline Primary believes that the demandd cardinals can be invested at 5 per cent a year in perennity.
i) What is the bestow prize in cethcoming 2017 of the well insucceeding course, and thus the sum which Colin must co-opereprimand to substantiate the cardinal?
ii) The Proud Discipline Primary, suitableness most complimentary of Colin’s powerful clemency, mentions that fees at Bunyip Proud are exaltation on mediocre by 3 per cent perfect year becaauthentication of inflation, and that in separeprimand years, $10,000 conquer referable be abundance to detain a student in year 12 coercion a well year. Colin careers that he conquer extension the sum to substantiate the cardinal so as to submit coercion extensions in the erudition sum by 3 per cent a year in perennity, the earliest extension betidering in cethcoming 2021. How abundantly extra (overhead the sum fitted in i) aggravatehead, conquer Colin deficiency to co-opereprimand in cethcoming 2017 so as to submit coercion these inflation extensions coercionever?
[HINT: Consider a coercionmula alike to the dividpurpose development pattern.]
QUESTION 2 lived.
b) This topic relates to grade reciprocations and grade stipulations.
Ron and Robin Reid effort to borrow $540,000 to donation a abode. The grade from Biggles Bank demands similar monthly reciprocations aggravate 20 years, and carries.an concern reprimand of 7.8% per annum, amalgamationed monthly. The earliest reciprocation is attributable at the purpose of the earliest month.
You are demandd to consider:
i) the talented annual concern reprimand on the aggravatehead grade.
ii) the sum of the monthly reciprocation (consisting of concern and primary reciprocation components) if the alike sum is to be rehired perfect month aggravate the 20 year continuance of the grade.
iii) the sum of $X, if – instead of the aggravatehead – Biggles Bank agrees that Ron and Robin conquer resecure the grade by secureing the bank $3,300 per month coercion the earliest 12 months, then $3,750 a month coercion the proximate 12 months, and succeeding that $X per month coercion the estimate of the 20 year message.
QUESTION 2 b) lived.
iv) how desire (in years and months) it would choose to resecure the grade if, resourcely, Ron and Robin career to resecure $2,500 per month, with the earliest reciprocation repeatedly substance at the purpose of the earliest month succeeding preliminary the grade, and persistent until the grade was repaid.
v) below non-interference iv) aggravatehead, the sum of the conclusive reciprocation. [NOTE: Towards the purpose of the grade reciprocation continuance, succeeding the conclusive generous monthly part-cancelment of $2,500 is hired, a lesser sum is slight to be extinguishedstanding. That sum, plus concern to the purpose of the prospering month, is the conclusive grade reciprocation sum.]
QUESTION 3. [(2 + 3 + 3 + 4 + 3 + 3) + (6 + 2 + 4) = 30 traces]
a) This topic relates to resource siege excellent techniques
Stanley Livingstindividual is because the prospering money flows coercion span mutually scientific purposes.
Year Money Flows, Siege X ($) Money Flows, Siege Y ($)
0 -40,000 -40,000
1 12,000 18,000
2 18,000 18,000
3 27,000 18,000
You are demandd to reply the prospering topics:
i) If the money flows succeeding year 0 betide evenly aggravate each year, what is the secureback continuance coercion each purpose, and on this premise, which purpose would you promote?
IN THE REMAINING PARTS, ASSUME THAT ALL CASH FLOWS OCCUR AT THE END OF EACH YEAR.
ii) Would the secureback continuances then be any incongruous to your reply in i)? If so, what would the secureback continuances be?
QUESTION 3 a) lived.
iii) Sketch freehand the entoil bestow prize (NPV) profiles coercion each siege on the alike graph. Label twain axes and the NPV profile coercion each siege.
iv) Calcudeceased the inside reprimand of restore (IRR) coercion each purpose and evince them on the graph. [NOTE: It is exquisite if the trench IRR is fitted coercion Siege X by burden and falsity, and recognized as a percentage rectify to the nearer well enumerate. The IRR coercion Siege Y should be fitted as a percentage correspondently, rectify to 1 decimal assign.]
QUESTION 3 a) lived.
v) Calcudeceased the correct crossaggravate sharp-object and evince it on the aggravatehead graph.
vi) State which of the sieges you would promote, depending on the demandd reprimand of restore (i.e., depending on the remittance reprimand).
b) This topic relates to the valuation of ties.
Bradley White, a lonely discipline pedagogue, has span 6 per cent per annum $100,000 Australian Government ties that aged on 15 August, 2020 and 15 August, 2023 respectively. At the era of the latest half-yforthcoming concern securement, viz., 15 February, 2017, twain ties were hawking at par.
Since then, concern submits on ties enjoy upright by 2% per annum, amalgamationed half-yearly. Bradley now intends to hawk the ties and dispose a defence on a provincial townhouse.
i) Calcudeceased the expense he conquer admit from each tie if he hawks on 15 August, 2017 at the innovating submit, instantly succeeding receiving the concern securements attributable that day.
QUESTION 3 b) lived.
ii) Explain the referring-to expense movements in the span ties, as evidenced in your reply to i) aggravatehead.
iii) Suppose that Bradley defers donationing the ties coercion 84 days, that is until 7 November, 2017. How abundantly conquer he secure coercion each tie on that day? [NOTE: Between the tie concern attributable eras from mid-August to mid-February is 184 days, during which spell concern accrues on a amalgamation premise.]
QUESTION 4. [24 + 2 = 26 traces].
This topic relates to primary budgeting.
Perth Purposes Ltd is because the donation of innovating technology devouring $600,000, which it conquer generousy finance with a unroving concern grade of 10% per annum, with the primary rehired at the purpose of 4 years.
The innovating technology conquer sanction the troop to weaken its to weaken its labour devours by $200,000 a year coercion 4 years, and the technology may be depreciated coercion reprimand purposes by the straight-verse regularity to cipher aggravate the 4 years. The troop thinks that it can hawk the technology at the purpose of 4 years coercion $30,000.
The technology conquer deficiency to be stored in a structure, floatingly substance rented extinguished coercion $40,000 a year below a lease concurrence with 4 yforthcoming rental securements to fly, the proximate individual substance attributable at the purpose of individual year. Below the lease concurrence, Perth Purposes Ltd can revoke the lease by secureing the dweller (now) remuneration similar to individual year’s rental securement plus 10%, yet this sum is referable deductible coercion insucceeding reprimand purposes.
This is referable the earliest spell that the troop has considered this donation. Twelve months since, the troop betrothed Marvel Deliberateants, at a fee of $30,000 hired in grade, to precede a feasibility con-over on savings strategies and Marvel made the aggravatehead recommendations. At the spell, Perth P:rojects did referable produce with the recommended diplomacy, yet is now rebecause the overture.
Perth Purposes excite estimates that it conquer enjoy to sppurpose $20,000 in 2 years’ spell aggravatehauling the technology. It conquer to-boot demand additions to floating goodss of $30,000 at the foundation of the purpose, which conquer be generousy recoverable at the purpose of the lewdth year.
Perth Purposes Ltd’s devour of primary is 10%. The reprimand reprimand is 30%. Reprimand is hired in the year in which rights are admitd.
(a) Calcudeceased the entoil bestow prize (NPV), that is, the entoil blessing or entoil dropping in bestow prize stipulations of the proposed donation devours and the subordinate incremental money flows.
[HINT: As shown in the text-book, it is recommended that coercion each year you calcudeceased the reprimand goods earliest, then substantiate the money flows, then calcudeceased the aggravategenerous entoil bestow prize.]
QUESTION 4 a) lived.
(b) Should the troop donation the technology? State clforthcoming why or why referable.
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