Accounting Assignment

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School of Business & Law

MODULE TITLE: ADMT

PROGRAMME: MBA

SEMESTER: Semester one

ACADEMIC YEAR PERIOD: November-March, 2012/13

LECTURER SETTING ASSESSMENT: - S.A.Palan

DATE ASSESSMENT SET AND LOADED ON TO STUDENT PORTAL:-
21st December 2012

DATE ASSESSMENT TO BE COMPLETED AND SUBMITTTED: - 18th February 2013

SUBMISSION METHOD/MODE:- Turnitin

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Assessment Type: An individual coursework

----------------------------------------------------------------------------------------------------------------- Indicative Assessment Requirements for the Module
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Mini Case Study

Your boss has just handed you information on 2 proposed projects. One of these projects involves adding a new product line, which would take some time to build up the market for this product so that the net cash flows would increase over time. The second project involves an add-on to an existing line and its cash flows are expected to remain the same over time (an annuity). Both projects are for five years. You are expected to make you are your own assumptions based on the above and determine the project cash flows. Both projects involve additions to the company’s highly successful product range and as a result the cost of capital on both projects has been set at 10.64 %.

In evaluating the projects you are required to respond to the following questions:

1. Investment appraisal should add value to the business entity. Critically evaluate this view. [40 %) 2. Calculate each project’s payback, NPV and IRR. (12 %) 3. For each of the above methods which projects should be selected and why? (6 %) 4. What would happen to the NPV if the cost of capital changed? (6 %) 5. How does a change in the cost of capital affect the...
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