5BUS1158 Investment Appraisal Analysis And Mondell Plc Assignment-UK.

Learning Outcomes: Knowledge and Understanding tested in this assignment:
1.Identify the sources of finance to a company and the reward of the providers of that finance;
2.Discuss the sources and evaluation of risk;
3.Analyse the role of mergers and acquisitions in achieving the objectives of a company;
Learning Outcomes: Skills and Attributes tested in this assignment:
4.Identify and apply appropriate techniques for choosing between alternative sources of funding;
5.Identify and apply appropriate methods for making long and short-term asset allocation decisions;
6.Apply different methods of incorporating risk into financial decision-making models;
5BUS1158 Investment Appraisal Analysis And Mondell Plc Assignment-UK.

5BUS1158  Investment Appraisal Analysis And Mondell Plc Assignment

Assessment Brief:
In 2019 Danny and Doris Mondell, enthusiastic surfers, started a small surfboard production business in the South West of England. Their business expanded as surfing became more popular and demand for their hand-
crafted surfboards increased. From their small beginnings grew the now publicly quoted company of Mondell plc.

In recent years the directors, headed by the Chief Executive Officer, Derek, have decided that the business has reached the limit of development in its present form. Future development requires large-scale expansion in order to compete with the cost base of mass-produced surfboards.

They have investigated a number of possibilities, deciding eventually to expand their production facilities and their distribution system so that their newly ‘branded’ products can be sold in independent, quality retailers
around Great Britain.

5BUS1158 Investment Appraisal Analysis And Mondell Plc Assignment-UK.

5BUS1158  Investment Appraisal Analysis And Mondell Plc Assignment

The project involves the acquisition of a new larger production and distribution facility in the local area at a cost of £15,000,000, payable immediately. This would involve transferring all current production to this new facility. If Mondell plc. decided to proceed with this project the current facility would be sold immediately. They have been given an estimate of £7,750,000 for the sale proceeds. New plant and machinery would need to be purchased at a cost of £9,500,000 before production could begin. This plant and machinery would be sold at the end of the ten-year period for an estimated scrap value of £2,500,000. In order to assess the building and investment costs of the project, professional fees of £50,000 will be incurred at the start of the project. They intend their new project to last for 10 years.

The project would be expected to achieve a maximum payback period of 5 years.The company’s cost of capital is 12%.

Other costs and revenues relating to the project are as follows:

In order to raise the funds required for investment in the expansion, the board of directors will consider both increasing borrowing and an issue of new shares. However, the level of gearing must not exceed 40%.

REQUIRED:
You have been asked to write a report to the directors which will;
a) assess the viability of the project by using appropriate investment appraisal techniques,
b) assess the potential sources of finance available.

Any specific instructions:
Your report should be structured as follows:
1.Title Page
2.Abstract (Tells the reader what they will find in the report)
3.Table of Contents (Tells the reader where everything is)
4.Discussion & Analysis
4.1. Evaluation of investment appraisal techniques
4.2. Evaluation of how to finance the investment
5.Conclusion and recommendations
6.References
7.Appendices

Title Page should include:
Title of the report, ID number, Submission Date, Degree Programme, Module Name & Number, Module Lecturer name, Word Count.
Your assignment will be marked anonymously.Please ensure that you do not put your name on your work.

5BUS1158 Investment Appraisal Analysis And Mondell Plc Assignment-UK.

5BUS1158  Investment Appraisal Analysis And Mondell Plc Assignment

Important Notes:

  • Do all your calculations on an Excel spreadsheet (separate from your report).
  • You must submit the original Excel spreadsheet.
  • Copying/pasting – whether screenshot, snapshot, image, photo, etc.- of the Excel spreadsheet into your presentation will not be accepted and no marks will be awarded for that element (worth 20 marks).
  • Upload both the “Report and the Excel spreadsheet” on Study net.
  • The word limit is 1500 words.
  • The word limit could be 10% over or below (+/- 10%) the maximum words.
  • Your word count starts from the Discussion and Analysis and ends after the “Conclusion and Recommendations“ sections of the report.
  • Word limit does not include; abstract, table of contents, references, appendix and excel spreadsheet.
  • Report should be submitted online with format at Arial font, word size 11.
  • Please use 1.5 line spacing.

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