FIN700 Financial Management Group Assignment

FIN700 – Financial Management
ASSIGNMENT– GROUP
Penalties for late lodgment, as per the Subject Outline, will be strictly applied.
This Assignment consists of 4 problems, each involving
calculations, and in some cases recommendations.
You are required to complete this Assignment in Groups of 2 or 3 or 4 people.
**Groups of 1 or more than 4 persons will incur a penalty of 5 marks out of 30.**
All members of the Group should come from the same Tutorial class. You may
consult and discuss the Assignment topic with others, but you must write up your
answers yourselves. Penalties for copying and plagiarism are severe.
You should follow the following typing conventions:
 Answers to be typed, in the space provided after each question
 If additional pages are required, use the blank pages at the end.
 Times New Roman font (at minimum, 12 pitch), 1.5 line spacing; and
 Left and right margins to be at least 2.5 cm from the edge of the page.
Research, Referencing and Submission
You should quote any references used at the end of each question.
Use Harvard referencing! See http://en.wikipedia.org/wiki/Harvard_referencing
As this is a calculations problem, there is no need to submit via TURNITIN.
Marking Guide
The Assignment will be scored out of 70%, with 20 marks also awarded for
quality of Recommendations and 10 for Presentation, in line with the rubric
in the Subject Outline. This mark will be converted to a score out of 30%.
Dr Mervyn Fiedler, Subject Coordinator, FIN 700. 10 August, 2018.
Do not submit this page submit from page 2 onwards, along with KOI Group
Assignment Cover Page & Marking Rubric.
____________________________________________________________________
***NOTE: When submitting Assignment, please submit from this page onwards,
with a KOI Group Assignment cover page in front,
and a FIN700 Marking Rubric at the back.***
Trimester T218
T218 – FIN700 – Financial Management - Group Assignment Page 1 of 15

FIN700
GROUP ASSIGNMENT
Students: Please complete the following before submitting for marking.
Group members
Student No. Student Name Percentage Contribution to Assignment Signature
1. ............................................................................................................
2. ............................................................................................................
3. ............................................................................................................
4. ............................................................................................................
Tutor: Please circle one name:
Dr Mervyn Fiedler; Ms Ruhina Karim; Mr Nishith Panthi;
Mr Masoud Ahmadi-Pirshahid; Mr Paul Power; Dr Gazi Hossain
Tutorial Day .........................................................and Time ............................
This Assignment consists of four questions. All questions must be answered.
Please answer all questions in the spaces provided after each question.
Two extra pages are included at the end of the Assignment, if more pages are
required, please copy (or extend) page 15.
QUESTION `1 [6 + 4 + 6 = 16 Marks.]
a) This is a two period certainty model problem.
Assume that Bradley Lane has a sole income from Fisher Ltd in which he owns 12%
of the ordinary share capital. Currently, Bradley has no savings.
In August, 2018, Fisher Ltd reported net profits after tax of $800,000 for the last
financial year, 2017-18 (1 July, 2017 to 30 June, 2018), and announced it expects
T218 – FIN700 – Financial Management - Group Assignment Page 2 of 15

net profits after tax for the current financial year, 2018-19, to be 20% higher than
last financial year’s figure. The company has a dividend payout ratio of 70%, which
it plans to continue, and will pay the annual dividend for 2017-18 in late-September,
2018, and the dividend for 2018-19 in late-September, 2019.
In late-September, 2019, Bradley wishes to spend $95,000, which will include the
cost of a new car. How much can he consume in late-September, 2018 if the capital
market offers an interest rate of 10% per year?
T218 – FIN700 – Financial Management - Group Assignment Page 3 of 15

QUESTION 1 continued
b) This is an annual equivalent costs (AEC) problem.
Speedy Delivery Ltd, which operates a courier service, requires a new van. It has
received two quotes. Van A will cost $70,000 now, has a three year life and will cost
$7,000 a year to operate. Van B will cost $90,000 now, has a four year life and will
cost $9,000 a year to operate. The relevant discount rate is 6 per cent per annum.
Ignoring depreciation and taxes, calculate the AEC for each. Which van do you
recommend that Speedy Delivery Ltd buy, and state why?
T218 – FIN700 – Financial Management - Group Assignment Page 4 of 15