Skip to main content

MBA – ADVANCED CORPORATE FINANCE

ASSIGNMENT BRIEF

Thiscourseworkassignmentconsistsofonepieceofworkdividedintotwoparts. You should ensurethatyou answerallthesections.

Beverages&SpiritsLtd (B&S Ltd)hasbeenmanufacturing beverages. In recentyearsB&SLtd has notedthatitscostshaverisensubstantiallyanditisconsidering closingoneormore ofits production plants.

ProjectedannualfuturecostsandrevenuesforeachplantareasshowninTable1.Theprojected costsandrevenuesareperunit.Inall,B&S Ltdexpectstosell100,000unitsof each beverage eachyear.

Table1

CostsareinUSD$

Factory
Revenues
Materials
LabourCosts
Overheads
Orange
60
10
5
25
Apple
180
130
25
45
Peach
100
20
60
20
Pear
350
85
225
150

Eachfactorylasts,intotal,forfiveyearsandthenbecomesobsolete.Theinitialcostof each factory and the associated research and development costs for each beverage were as
shown in

Table2
Factory
Table 2. Thesewerepaid

InitialCost($)
two years ago when productioncommenced.

ResearchandDevelopment

Orange

10,000,000
Costs($)
2,000,000
Apple
15,000,000
5,000,000
Peach
20,000,000
1,000,000
Pear
30,000,000
2,000,000

B&S Ltd must also pay a service charge on the factory, which is payableimmediatelyif productionatthefactorycontinues.TheseareshowninTable3.Theservicefeeisnotpayableif productionendsatthefactoryimmediately;insteadeach factorycouldbesoldfortheamounts detailedinTable3.Theseamountswillberealised onlyif production endsimmediately.

Table3

Factory
ServiceCharge($)
ResaleValue($)
Orange
10,000,000
4,000,000
Apple
2,000,000
8,000,000
Peach
3,000,000
3,000,000
Pear
6,000,000
7,000,000

Note:
Depreciationischargedonastraightlinebasisoverthelifeoftheproject.
Researchanddevelopmentexpenditureistreatedinthesameway.Ignoretaxation.The
estimatedcostofcapitalforB&SLtdis13%.B&SLtd has$180,000,000investedinindex
linkedgiltswhichprovideanannual returnof4%.B&S LtdusuallyappliesNPVandIRR
investmentappraisalmethods. Itdoesnotcurrently usepayback.

Required:

(a)

Discuss whether B&SLtd should rationalise and end production in any of the factories producing thebeverages. Ifso, suggest which factories should be closed and explain youranswer fully. Explain whatreservationsyoumay have.

(45marks)
(b)
IfB&SLtdfacedashortageofcash[e.g.BankHaircut]andwasable to meetservice charges up to a total value of only $10,000,000, which factorieswould B&SLtd decidetokeepopen?

(15marks)
(c)
DiscusswhytheInternalRateofReturnmethodisusedmoreoften than NPV byfinancial directors.

(40marks)



Comments

Post a Comment

Popular posts from this blog

Identify and discuss a key milestone in the history of computers that interests you and why.

  Part 1Title: Lab ResponseDiscuss one feature of MS Word and one feature of MS Excel that you found challenging within the lab and why. Examples are WordArt, inserting shapes, adding borders, cell styles, etc. This response should be at least one paragraph in length. Part 2Title: History of Computers Identify and discuss a key milestone in the history of computers that interests you and why. This section should be at least one paragraph. Part 3Title: System Software vs. Application Software In your words, explain the difference between application software and system software as if to another coworker who has limited technical knowledge. Use examples to support your rationalization. This section should be at least two paragraphs. Part 4Title: Blockchain and Cryptocurrency In a minimum of one paragraph each: 1. Conduct some research on the internet and discuss one underlying technology of cryptocurrencies like blockchain, cryptography, distributed ledger technol...
Post a Comment
Read more

Cybersecurity and Infrastructure Security (CISA)

 Develop a research paper that identifies a specific Department of Homeland Security (DHS) operating agency. Fully describe 1 DHS operating agency from the following list: Cybersecurity and Infrastructure Security (CISA) U.S. Customs and Border Protection (CBP) U.S. Citizenship and Immigration Services (USCIS) Federal Emergency Management Agency (FEMA) U.S. Coast Guard (USCG) U.S. Immigration and Customs Enforcement (ICE) U.S. Secret Service (USSS) Transportation Security Administration (TSA) The information must include a discussion of the selected DHS agency. Identify the agency’s mission, goals, objectives, and metrics. Conduct an analysis of how these mission areas address the threats or challenges. Recommend agency program priorities among the current set of goals, objectives, metrics, or budget items. Justification of all choices is an essential element of this assignment. Reference all source material and citations using APA format. WE OFF...
Post a Comment
Read more

Discuss how the project

ord count : no idea 1. You are required to write a report on all project activities involved in all the 10 knowledge areas of project management for the entire project life cycle. You should also include a list of the respective PM documents, for example PM Plan, PM Quality Management Plan, Risk management, Procurement, etc. The report must include the activities that are considered before the project is closed out. 2. Discuss how the project quality management plan can provide adequate standards and controls in managing global teams in projects. Your discussion must provide adequate arguments for the need of cultural awareness and legal issues. Regards, The post Discuss how the project appeared first on My Assignment Tutor . Assignment status :  Resolved by our Writing Team Source@ PrimeWritersBay.com GET THIS PAPER COMPLETED FOR YOU FROM THE WRITING EXPERTS   CLICK HERE TO ORDER 100% ORIGINAL PAPERS AT PrimeWritersBay.com NO PLAGIARISM
Post a Comment
Read more