INVESTMENT APPRAISAL (CAPITAL BUDGETING) TECHNIQUES

PLEASE SEE ATTACHED ASSIGNMENT GUIDE FOR FULL INSTRUCTIONS.

 

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Indicative Assessment Tasks:

Assignment TWO (Report) (35%) (circa 1,000 words) INVESTMENT APPRAISAL (CAPITAL BUDGETING) TECHNIQUES

Glynd Marketing Ltd is using an Ansoff marketing matrix as a framework for deciding upon its potential strategies for future growth.

A series of Ansoff growth strategies can set the direction for the company‘s strategy such as market penetration (project A), market development (project B), product development (project C) and diversification (project D).

At present, the company is not willing to consider project C (product development) and D (diversification strategy) owing to the risks involved in manufacturing and marketing new products.

Following market and financial research conducted by the company, the expected cash flows of two marketing projects (A and B) for the next three years are provided in the table below.

As the accounting consultant of Glynd Marketing Ltd, you are required to provide critical advice to a client on the best investment decision, on whether to invest in marketing projects A or B.

In order to maximize the investment return to your client, you are required to employ several investment appraisal techniques such as the techniques of PP (Payback Period), Discounted PP, ARR (Accounting Rate of Return), NPV (Net Present Value), IRR (Internal Rate of Return) and Sensitivity Analysis.

With the prevailing interest rate in the lending and borrowing markets, as a professional accountant, you consider that the cost of capital (r or i) at present is 4 per cent.

 

 

 

PLEASE SEE ATTACHED ASSIGNMENT GUIDE FOR FULL INSTRUCTIONS.

 

 

Required Tasks:

·       You are required to calculate the PP, Discounted PP, ARR, NPV, IRR and Sensitivity Analysis of each project. (50%)

·       Discuss the detailed advantages (strengths) and disadvantages (weaknesses) of each method of investment appraisal techniques. (30%)

·       You are required to comment on the stability of the projects. (10%)

·       Show the ranking of the projects using all the above criteria and as a professional accountant, critically advise your client on the best investment action, on whether to invest in marketing project A or B. (10%)

(Total 100%)

Guidelines

·       Word count: 1,000

·       Weighting: 35% of course marks

 

Take particular note:

1.    An electronic copy of the assignment must be submitted through Turnitin.  Paper copy not required

2.    10% of marks are awarded for satisfactory use of language and/or good presentation.

3.    5% of marks are awarded for satisfactory referencing and/or presentation of a bibliography where either is required. Note that all referenced work should be obtained from credible sources.

4.    Students should ensure that they comply with the University’s plagiarism policy.

5.    Students should make correct use of the Harvard referencing method.

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