Assessment 3: Business Case Studies 2
\nDue date: 28 January 2022, 11PM
\nThis assignment has a 25% weighting in your overall mark for this unit and focuses on content from Topics 6, 7 and 8. The assignment will be marked out of 25 and marks will be allocated as indicated in the rubric on page 4. Your total assignment submission will consist of a word document and a spreadsheet.
\nCase information
\nThe assignment is based on the case information below. While the company Lego, does exist, the financial data as well as the scenario in this case study are fictitious1, however the context is not. Many businesses and government departments face similar investment decisions in order to remain competitive as well as being more environmentally and socially responsible.
\nThe Lego Group is a privately owned company based in Denmark and produces toys for both children and adults that are based on building structures from interlocking plastic bricks.
\nThe company is in the process of becoming more environmentally conscious and moving away from the issue of traditional style plastic bricks that take many years to breakdown and using plant based materials from sustainable sources to manufacture their toys. This strategy aligns with their goal of tackling climate change issues.
\nThis product (BIOLego) is totally new to the market and no other competitor has yet to initiate a \u2018lego\u2019 style product like it. The benefits of this product are that they are made from sustainable plant products and recycled plastics that are protecting the soils, waterways and oceans. For this reason, The Lego Group believes that this product will cost more to produce and install than its existing manufacturing capability and has more risk involved with its rollout into the current market than that of its existing products.
\nThis new product will require an upfront expenditure on a new piece of machinery to manufacture the product. There is currently not one in the marketplace and will need to be custom built. The company has received quotes from certain manufacturers of machines to build this machinery and is satisfied that these quotes are realistic in terms of cost. The estimated cost of the new machinery totals $450 million. The company plans on financing this amount from their bank at quoted interest rate of 2.57% per annum.
\nThe engineers of the company believe that this machine has a useful life of 6 years before needing to be updated with new technology as it comes available in future years. The machine will be depreciated using the prime cost method to zero over the life of the asset. At the end of the project ( help with nursing paper writing from experts with MSN & DNP degrees), some of the machine can be sold off in parts for scrap at a total of $10 million. The machine will need to be dismantled and removed and at a cost of $3 million.
\n1. The Lego company and its proposed revenue growth strategies and sustainability strategies provide the inspiration for this case but all of the facts and financial information used are fictitious.
\nThe company has spent several years researching and developing this product at a combined cost of $4 million. The CEO of The Lego Group has asked you to prepare a financial analysis of this initiative. They have asked you to provide a summary of your analysis, as well as providing your recommendations in the form of a short memo.
\nThe sales and marketing department have conducted several focus groups with customers and are satisfied that BIOLego will be successful. It is estimated that revenues in the first year of the product\u2019s introduction will total $170 million, however this is not certain. These sales are forecasted to increase by 30% each year in years 2, 3, 4 and 5 as an increase in awareness of the product becomes evident. By year 6, it is expected that sales will increase by 70% as this product now takes over from their existing plastic-based products. However, due to the focus groups only targeting a small group of customers, the team are concerned that this product may not be as successful as forecasted so in their recommendations they have estimated a 30% standard deviation in the estimated revenues.
\nThe sales and marketing team have also highlighted that the existing products sold by the company (based on plastic products) is likely to see a fall in sales due to the introduction of the new product. The product currently generates $120 million profit before tax for the company each year and it is estimated that this will fall by 50% with the introduction of BIOLego.
\nThe production department have estimated that production costs will be equal to 45% of the forecasted revenues each year. There will also be a requirement for the company to have additional working capital on hand for this project ( help with nursing paper writing from experts with MSN & DNP degrees) equal to 15% of each upcoming year\u2019s sales forecast. This working capital forecast is relatively certain and based on previous production requirements of the company. The investment in this additional working capital will be made at the beginning of the project ( help with nursing paper writing from experts with MSN & DNP degrees) and will be fully recovered at the end of year 6, the last year of the project ( help with nursing paper writing from experts with MSN & DNP degrees).
\nOther additional costs related to the project ( help with nursing paper writing from experts with MSN & DNP degrees) are as follows, (1) marketing costs $7 million (this is a best guess forecast) in the first year only; (2) maintenance costs of $4 million per year (certain forecast) and administration costs of $3 million per year increased by 2% each year after year 1 (certain forecast). The Lego Group have spent $1.5 million on feasibility studies for the project ( help with nursing paper writing from experts with MSN & DNP degrees).
\nThe Lego Groups financiers have advised them that the company\u2019s weighted average cost of capital is 8% and is subject to a 30% income tax rate. It is assumed that all taxes are paid in the year of income to which they relate.
\nRequired:
\nPrepare (1) a spreadsheet financial analysis of the proposed project ( help with nursing paper writing from experts with MSN & DNP degrees) and (2) a memo (maximum 1,000 words) to the CEO of The Lego Group that summarises your key results and provides recommendations on the project ( help with nursing paper writing from experts with MSN & DNP degrees). Note carefully the following points:
\n\u2022 Analyse base case (expected) cash flows and potential uncertainty.
\n\u2022 For your base case analysis, calculate the five investment decision criteria listed in the relevant topic (sample nursing essay examples by the best nursing assignment writing service)\u2019s Overview document.
\n\u2022 If you make any assumptions beyond those given in the case information, explain them.
\n\u2022 Recommendations should address the decision suggested by the base case, along with further follow up or other matters the company should consider prior to making a final decision.
\n\u2022 Include an appendix to the memo that provides a readable screenshot(s) of your base case cash flows, the purpose of which is to allow the CEO to see line item detail without needing to spend time going to the spreadsheet itself.
\n\u2022 Within the memo body, you are advised to use tables and\/or figures to Help decision makers quickly see main points and to visualise your analysis results but ensure the tables and figures are discussed or explained.
\nInstructions:
\nSubmit your spreadsheet separately in the provided spreadsheet link in the BCS2 section of the unit site. By submitting the spreadsheet, you are confirming that it is entirely your own work. Save the spreadsheet with your details in the file name using the following format (failure to do so could result in your spreadsheet not being considered in marking):
\nStudent ID_Full_name_ACCT6004A3
\nFor example: 13579246_John_Smith_ACCT6004A3
\nThe spreadsheet submission allows only one submission attempt so do not upload your spreadsheet until you are sure it is complete.
\nThe memo will be submitted as a word document via a Turnitin assignment link in the BCS2 section of the unit site. Do not include a coversheet; commence with the memo. You can resubmit your document as many times as you like prior to the due time. You are therefore advised to examine your Turnitin Originality Report for this assessment to make sure your similarity score is low with very little highlighted text aside from technical phrases and quoted passages that are appropriately referenced.
\nThis assessment will be marked using the rubric below. You are advised to read the rubric carefully so you know the criteria and performance levels upon which you work will be assessed. This is an individual assessment exercise. The unit teaching team is very experienced at marking such assessments and recognising the differences between individual and \u201cgroup\u201d work, as well as data, facts, statements and ideas of others that have not been appropriately acknowledged. To avoid any potential for academic misconduct investigation, ensure that every aspect of your work is your own and that you acknowledge all sources you have directly drawn upon in your submitted work. Quotations should be shown as such. We are not fussy about referencing style, just that you reference when needed.
\nAssessment 3: Business Case Studies 2 ACCT6004 S3 2021
\nMARKING CRITERIA Excellent Very Good Good Satisfactory Poor
\nAccurate estimation of
\nrelevant base case cash flows and
\ndecision criteria
\n(12 marks) All relevant base case cash flows have been accurately
\nincorporated into the analysis
\nand net cash flows and decision criteria are correct. (12 marks) Nearly all relevant base case cash flows have been
\naccurately incorporated into the analysis and decision
\ncriteria are correct based on your net cash flows (10
\nmarks) Most relevant base case cash flows have been accurately
\nincorporated into the analysis and decision criteria are
\nmostly correct based on your net cash flows. (8 marks) About half the relevant base case cash flows have been accurately
\nincorporated into the
\nanalysis and decision
\ncriteria are mostly correct
\nbased on your net cash flows. (6 marks) Less than half the relevant base case cash flows have
\nbeen accurately incorporated into the analysis and decision criteria may be mostly
\nincorrect based on your net cash flows. (0 to 4 marks)
\nAccurate and appropriate analysis of
\nuncertainty
\n(5 marks) You have accurately analysed project ( help with nursing paper writing from experts with MSN & DNP degrees) uncertainty using
\nappropriate techniques. You have shown insight by judicious input
\nchoices that are well-articulated and linked to case facts. The
\nanalysis is easy to follow. (5
\nmarks) You have accurately analysed project ( help with nursing paper writing from experts with MSN & DNP degrees) uncertainty using
\nappropriate techniques and judicious input choices that are mostly well-articulated
\nand linked to case facts. The
\nanalysis is easy to follow. (4
\nmarks) You have analysed project ( help with nursing paper writing from experts with MSN & DNP degrees) uncertainty using appropriate techniques and mostly
\njudicious input choices that are mostly well-articulated
\nand linked to case facts. The analysis is easy to follow. (3.5
\nmarks) You have analysed project ( help with nursing paper writing from experts with MSN & DNP degrees) uncertainty using at least
\none appropriate technique.
\nInput choices lack justification, are
\nunreasonable or the
\nanalysis is not easy to follow. (2.5 marks) You have not analysed project ( help with nursing paper writing from experts with MSN & DNP degrees) uncertainty using appropriate techniques or have
\nattempted to use at least one
\nappropriate technique but with no demonstrated
\nconsideration of input choices in a hard to follow analysis or
\nthere are major inaccuracies. (0 to 2 marks)
\nAppropriate interpretation and
\nrecommendations based on the
\nproject ( help with nursing paper writing from experts with MSN & DNP degrees) analysis
\n(8 marks) You have accurately interpreted the results of your financial
\nanalysis and made appropriate
\nand insightful recommendations with the basis of those
\nrecommendations clearly and concisely explained.
\nRecommendations go further than simply accepting or rejecting the project ( help with nursing paper writing from experts with MSN & DNP degrees) by recognising the subtleties of project ( help with nursing paper writing from experts with MSN & DNP degrees) decision
\nmaking and needed additional
\nanalysis or considerations. Use of language makes meaning
\nconsistently clear; no or very few grammar, syntax and spelling
\nerrors. (8 marks) You have accurately interpreted the results of your
\nfinancial analysis and made appropriate
\nrecommendations.
\nRecommendations go further than simply accepting or
\nrejecting the project ( help with nursing paper writing from experts with MSN & DNP degrees) by
\nrecognising some subtleties of project ( help with nursing paper writing from experts with MSN & DNP degrees) decision making
\nand\/or needed additional
\nanalysis or considerations.
\nUse of language mostly makes meaning clear; no or very few
\ngrammar, syntax and spelling errors. (6.5 marks) You have accurately interpreted most of the results of your financial
\nanalysis and made some appropriate
\nrecommendations. Subtleties of project ( help with nursing paper writing from experts with MSN & DNP degrees) analysis and
\ndecision making have
\ngenerally not been
\nrecognised. Use of language
\nmostly makes meaning clear; several grammar, syntax and spelling errors. (5.5 marks) You have accurately interpreted some of the results of your financial
\nanalysis and made at least one appropriate
\nrecommendation. Use of language mostly makes meaning clear; several grammar, syntax and spelling errors. (4 marks) You have not correctly interpreted most results from your financial analysis or no
\nrecommendations have been made or recommendations
\ndo not follow from the results or interpretation. Use of language mostly makes meaning unclear; many
\ngrammar, syntax and spelling errors. (0 to 3 marks)<\/p>\n","protected":false},"excerpt":{"rendered":"
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