BKAF3073 Project A141

Topics: Cash flow, Discounted cash flow, Net present value Pages: 4 (729 words) Published: December 4, 2014
BKAF3073 FINANCIAL ACCOUNTING AND REPORTING IV
SEMESTER I - 2014/2015
PROJECT (15%)

Guidelines and requirements
The purpose of this project is to allow students to comprehend the concept of corporate valuation and to apply this concept in valuing business opportunity, cash flow analysis and credit risk assessment. This project will require students to analyse two independent case studies as in Appendix 1. Students will need to form a group of 4 to 5 people. Each group will be asked to: (i) submit cases write-ups, and (ii) present the two cases. (i) Cases write-ups should take the following form:

One-page executive summary stating your understanding of the situation; any key assumptions; and the recommended course of action.
Appendix with any backup spreadsheet or key analyses
Cases write-ups is limited to 15 pages
(ii) Presentation of both cases
Are limited to 15 slides and limited to 20 minutes per group.

Assessment
The breakdown of the assessment of the project is as follows: Case write-ups:
- Case 1: 4%
- Case 2: 6%
Presentation: 5%

Submission date: 11th. December 2014

1

Appendix 1
Case I: Green Berhad
In September 2014, Mr. Najib Abdullah, the head of business development for Green Berhad is considering an investment in Alam Sdn Bhd, a new joint venture company which was established at the end of the year 2013. The following information has been forecasted for Alam Sdn Bhd.

Year
2014
2015
2016
2017
2018
2019
2020

Net Income
(RM)
2,034
2,130
2,218
2,256
2,278
2,404
2,546

Beginning Book Value of Net Assets
(RM)
6,300
6,290
6,830
7,330
7,220
8,260
8,850

The required rate of return for Alam Sdn Bhd is estimated at 10%, while residual earnings are expected to grow at 6% per year after 2020.
Table 1
Period (n)

1
2
3
4
5
6
7

Present value of 1
6%
0.94340
0.89000
0.83962
0.79209
0.74726
0.70496
0.66506

10%
0.90909
0.82645
0.75131
0.68301
0.62092
0.56447
0.51316

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