Kaplan Professional DIPMB2 Complex Lending and Broking Assignment

This written assignment, titled Complex Lending and Broking (DIPMB2_AS_v2), presents a comprehensive case study-based assessment for students in the field of finance. The assignment requires students to analyze two distinct case studies, each focusing on different lending scenarios. Section 1, Case Study A, involves Ray Murdoch and Steve Brown, owners of Pallets-R-Us Pty Ltd, who require financing for a sophisticated CNC machine. Students must identify the clients' complex broking needs, develop suitable broking options, and implement complex loan structures. The case study provides detailed information on the business, the clients' financial positions, and the specific financing requirements, including the need for a letter of credit. The second part of the assignment, Section 2, presents another case study involving Bill Smith and John Jones focusing on Commercial Premises Finance. The assignment is designed to assess the students' ability to apply their knowledge of complex lending and broking principles to real-world scenarios, encompassing tasks from identifying client needs to structuring and implementing financial solutions. The assignment emphasizes the importance of financial analysis, product knowledge, and the ability to tailor financial strategies to meet specific client requirements. The overall objective is to demonstrate competence in complex lending and broking principles.

Written Assignment
Complex Lending and Broking
(DIPMB2_AS_v2)
Student identification (student to complete)
Please complete the fields shaded grey.
Student number 10395520
Written Assignment result
(assessor to complete)
Result — first submission (Details for each activity are shown in the table below)
Parts that must be resubmitted:
Result — resubmission (if applicable)
Result summary (assessor to complete)
First submission Resubmission (if required)
Task 1 Demonstrated Demonstrated
Task 2 Demonstrated Demonstrated
Task 3 Demonstrated Demonstrated
Feedback
(assessor to complete)
[insert assessor feedback]
DIPMB2_AS_v2

Before you begin
Read everything in this document before you start your written assignment for the Complex Lending and
Broking (DIPMB2v2) subject.
About this document
This document is the written assignment and includes the following:
• Instructions for completing and submitting this written assignment
• Section 1: Case Study A – Ray Murdoch and Steve Brown – Commercial Equipment Finance
– Task 1a – Identify the clients’ complex broking needs
– Task 2a – Develop complex broking options
– Task 3a – Implement complex loan structures
• Section 2: Case Study B – Bill Smith and John Jones – Commercial Premises Finance
– Task 1b – Identify the clients’ complex broking needs
– Task 2b – Prepare complex broking options
– Task 3b – Implement complex loan structures
How to use the study plan
We recommend that you use the study plan for this subject to help you manage your time to complete the
written assignment within your enrolment period. Your study plan is in the KapLearn Complex Lending and
Broking (DIPMB2v2) subject room.
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Instructions for completing and submitting this written
assignment
Saving your work
Download this document to your desktop, type your answers in the spaces provided and save your work
regularly.
• Use the template provided, as other formats will not be accepted for this written assignment.
• Name your file as follows: Studentnumber_SubjectCode_Assignment_versionnumber_Submissionnumber
(e.g. 12345678_DIPMB2_AS_v2_Submission1).
• Include your student ID on the first page of the written assignment.
Before you submit your work, please do a spell check and proofread your work to ensure that everything is
clear and unambiguous.
The written assignment
The information and data you need to complete this written assignment is presented in the case studies at
the beginning of each task.
This written assignment covers complex lending and broking and requires you to answer the questions for
one (1) of the two (2) available case studies. Each case study focuses on a different lending scenario.
Word count
The word count shown with each question is indicative only. You will not be penalised for exceeding the
suggested word count. Please do not include additional information which is outside the scope of the
question.
Additional research
When completing this assignment, assumptions are permitted although they must not be in conflict with
the information provided in the Case Studies.
You may also be required to source additional information from other organisations in the finance industry
to find the right products or services to meet your client’s requirements, or to calculate any service fees
that may be applicable.
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Submitting the written assignment
Only Microsoft Office compatible written assignments submitted in the template file will be accepted for
marking by Kaplan Professional Education. You need to save and submit this entire document.
Do not remove any sections of the document.
Do not save your completed written assignment as a PDF.
The written assignment must be
completed before submitting it to Kaplan Professional Education.
Incomplete written assignments will be returned to you unmarked.
The maximum file size is 20MB for the written assignment. Once you submit your written assignment for
marking you will be unable to make any further changes to it.
You are able to submit your written assignment earlier than the deadline if you are confident you have
completed all parts and have prepared a quality submission.
Please refer to the Assignment submission/resubmission instructions (pdf) in the Assessment section of
KapLearn for details on how to submit your written assignment.
Your
written assignment must be submitted on or before your due date. Please check KapLearn for the
due date.
The written assignment marking process
You have 12 weeks from the date of your enrolment in this subject to submit your completed assignment.
If you reach the end of your initial enrolment period and have been deemed Not Yet Competent in one or
more assessment items, then an additional 4 weeks will be granted, provided you attempted all assessment
tasks during the initial enrolment period.
Your assessor will mark your written assignment and return it to you in the Complex Lending and Broking
(DIPMB2v2) subject room in KapLearn under the ‘Assessment’ tab.
Make a reasonable attempt
You must demonstrate that you have made a reasonable attempt to answer all of the questions in
your written assignment. Failure to do so will mean that your assignment will not be accepted for marking;
therefore you will not receive the benefit of feedback on your submission.
If you do not meet these requirements, you will be notified. You will then have until your submission
deadline to submit your
completed written assignment.
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How your written assignment is graded
Assignment tasks are used to determine your ‘competence’ in demonstrating the required knowledge
and/or skills for each subject. As a result, you will be graded as either competent or not yet competent.
Your assessor will follow the below process when marking your written assignment:
• Assess your responses to each question, and sub-parts if applicable, and then determine whether you
have demonstrated competence in each question.
• Determine if, on a holistic basis, your responses to the questions have demonstrated overall competence.
You must be deemed competent in all assessment items in order to be awarded your qualification,
including demonstrating competency in:
• all of the exam questions
• the written assignment.
‘Not yet competent’ and resubmissions
Should sections of your assignment be marked as ‘not yet competent’ you will be given an additional
opportunity to amend your responses so that you can demonstrate your competency to the required level.
You must address the assessor’s feedback in your amended responses. You only need amend those sections
where the assessor has determined you are ‘not yet competent’.
Make changes to your original submission. Use a different text colour for your resubmission. Your assessor
will be in a better position to gauge the quality and nature of your changes. Ensure you leave your first
assessor’s comments in your assignment, so your second assessor can see the instructions that were
originally provided for you. Do not change any comments made by a Kaplan assessor.
Units of competency
This written assignment is your opportunity to demonstrate your competency against these units:
Unit code Unit name DIPMB2 Complex
Lending and Broking
DIPMB3 Business
Management Skills
FNSFMB502 Identify and develop broking options for
clients with complex needs
Started Completed
FNSFMB503 Present broking options to clients with
complex needs
Started Completed
FNSFMB504 Implement complex loan structures Started Completed
FNSCUS501
Develop and nurture relationships with
clients, other professionals and third
party referrers
Started Completed
FNSPRM602 Improve the practice Started Completed
Note that the
Written Assignment is required to meet the requirements of the units of competency.
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We are here to help
If you have any questions about this written assignment you can post your query at the ‘Ask your Tutor’
forum in your subject room. You can expect an answer within 24 hours of your posting from one of our
technical advisers or student support staff.
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Section 1: Case study A — Ray Murdoch and Steve Brown –
Commercial Equipment Finance
Background
You have just met with Ray Murdoch and Steve Brown, referred to you by another commercial client.
Ray Murdoch and Steve Brown jointly own a successful and growing business that manufactures metal
pallets. They trade under the name Pallets-R-Us Pty Ltd. The pallets are manufactured using material that is
lightweight and durable. There has also been a very structured approach to the research and development
for the engineering and design of the pallets. The pallets are used in all industry sectors. Part of the process
involves powder coating the finished product, which is currently outsourced to a local well-established
contractor.
It is critical that Ray and Steve’s product meets market needs. They need to maintain sustainable
production and operating costs if they are to forecast their sales and cost of sales.
They have a well-established client database that provides them with repeat ‘business-to-business’
dealings. While they have only been trading for 30 months, they have a solid business plan with written
supply contracts with three major business clients and several smaller business clients.
Ray and Steve now require finance to assist them with the purchase of a sophisticated machine, using the
technical platform system CNC. This machine can be programmed to rapidly fabricate multiple components.
The machine has an expected commercial lifespan of at least 15 years with operating software to be
updated every three years. This software and upgrades is included in the purchase price of $800,000.They
need to import the machine from the US. Initial enquiries with the US supplier have indicated that they will
require a letter of credit for the import of the machine.
Their business employs five people and, with the expected increase in business through the automation
of production, they have forecast that they will need to recruit an additional two staff members in the next
3–6 months to meet sales/production demands.
Ray has been in the metal fabrication field all his working life. He has an MBA and understands financial
management. He also has solid engineering skills and developed the majority of the design works for the
business. He is married and has no dependants. His wife is a school teacher and she will be retiring at the
end of the year.
Steve worked with Ray at ‘Protech’ as a foreman. His skills are in production and managing project/job
flow. He has high level technical skills and can complete works to specification at a high standard.
Steve and Ray have provided the last two years financial accounts for the trading business, as well as
interim accounts for the current financial year. Ray’s brother provided business with a loan $500,000 when
the business commenced and he is being repaid interest plus a principle repayment of $30,000 per annum.
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Applicant information
Client Ray Murdoch Steve Brown
Current address: Unit 43, 25 High St Northville, <Your State> and
has lived there for six years
23 Desmond Lane Northville, <Your State> and has lived
there with Kate for seven years. They own property jointly.
Home phone: [phone] 1212
Status Ray is divorced with no dependent age children Steve is married with no dependents
Employment Self-employed business owner Self-employed business owner
Income $100,000 per annum $100,000
Property value $750,000 $900,000
Cash at bank $12,500 $9,600
Contents $100,000 $85,000
Superannuation $250,000 Steve $350,000, Kate $60,000
Motor vehicle $40,000 $55,000
Home loan $250,000 repayments $2,068p.m., P & I, 18 years
remaining
$350,000 repayments $2,645 p.m., P & I, 22 years
remaining
Credit card $25,000 limit with debt of $15,000 payment @3% $10,000 limit with debt of $3,000 payment @3%
Car loan $0 $15,000 repayment $746p.m., remaining term 4 years
The business
Year 1 net profit after tax $200,000
Year 2 net profit after tax $220,000
Current year interim profit (10 months trading) $200,000
Wages to partner 1 – years 1 and 2 $100,000
Wages to partner 2 – years 1 and 2 $100,000
Principal repayment to Ray’s brother repaid annually $30,000
Key balance sheet items
Cash $25,000
Debtors $220,000
Creditors $100,000
Notes The business currently meets all creditor payments at 30-day terms.
Debtor collection has been solid. They invoice an upfront payment of 50% of the sale price, which assists in
funding their production.
They have orders of $1m over the next 3 months and have made an increase in their gross profit margin.
The orders are from several clients, so their debtors will be well spread.
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Task 1a — Identify the clients’ complex broking needs
Prepare a list of questions that you would need to ask Ray and Steve about their history, experience,
business performance and the intended equipment purchase.
In preparing your list of questions you should ensure that you cover the following:
• the complex features in importing and purchasing this equipment and benefits that will come to the
Company from such purchase
• the identification of potential risks in such a transaction and Ray’s and Steve’s tolerance of risk
• the financial aspects of the transaction and current financial position of the business.
(800 words)
Student response to Task 1a
The question list which is prepared is focused for the business undertaken by Ray Murdoch and Steve
Brown and helps to understand the nature of the business and also its operations. In addition to this, the
questions will also be useful in getting an insight in the financial requirements of the business and also
obtain useful information about the day to day operations and needs of the business. The question list is
also prepared for the reason for assessing and identifying the risks which are associated with the business.
The question will able help in identifying the current financial obligations of the clients. The questions are
presented below:
Question 1: What is the present age and role in business of Ray and Steve?
Question 2: What is the average yearly income made by Ray and Steve from Business?
Question 3: Why Ray and Steve are so eager to purchase the machinery?
Question 4: How much income does Ray and Steve anticipate to generate from the use of the
machine in business?
Question 5: What is the estimated budget which is required for purchasing the machinery?
Question 6: What is the annual expense incurred by Pallets-R-Us Pty Ltd?
Question 7 Give an account of aims and objectives behind purchase of machinery by Pallets-R-Us
Pty Ltd?
Question 8: Could you provide a choice regarding the investments you are looking for the project?
Question 9: Can you specify whether the machinery will be used for official use or even for non-
official use as well?
Question 10: What is the current cash position of the business as per bank statements?
Question 11: Can you identify how much capital will be required for the purchase of machinery?
Question 12: What are the requirements do you expect us to fulfil?
Question 13: Have all the rules and regulations which are provided by Australia law followed for the
purpose of investment?
Question 14: Could you specify the reason due to which the purchase of this machinery plan is being
followed?
Question 15: Please specify the primary and secondary source of income for Pallets-R-Us Pty Ltd?
Question 16: What actions will be taken if the value of the machinery falls in next 20 years?
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Question 17: What are your anticipation regarding the improvement, short term gains or long-term
gains?
Question 18: In case of loss, what is the immediate action taken by the business?
Question 19: Can you identify the major risks which can affect the business of Pallets-R-Us Pty Ltd?
Question 20: Specify the steps which are taken by the business when making investments which
aims to reduce the risks of the investments?
Question 21: What is your understanding about the functions and workings of investment markets?
Question 22: Give an example of a past investment made by business and how did it impact the
returns of the business?
Question 23: Could you specify the criteria which the business is pursuing?
Question 24: Could you provide the details which the business of Pallets-R-Us Pty Ltd follows
regarding borrowings when purchasing a machinery?
Question 25: What is the investment pattern which can be identified for Pallets-R-Us Pty Ltd?
Question 26: What risks can be identified in investment patterns of the business?
Question 27: Can you provide a description about the financial status of the business?
Question 28: What other investments have you considered for inclusion in portfolio of Pallets-R-Us
Pty?
Question 29: Would the business of Pallets-R-Us Pty Ltd prefer higher returns with higher risks in
business?
Question 30 What requirements does Pallets-R-Us Pty Ltd consider before making any investments
in any asset?
Question 31: What experience does the business of Pallets-R-Us Pty Ltd have in trading practices of
Pallets-R-Us Pty Ltd?
Question 32: What are the qualities and qualification expected from a consultant working in Pallets-
R-Us Pty Ltd?
Question 33: What are the negotiations which the management of Pallets-R-Us Pty Ltd can bring
about in the purchase of the machinery?
Question 34: Is there an alternative for the machinery which the business wants to purchase?
Question 35: What is the present ROI which is achieved by the business during the year?
Question 36: What are the other types of investments which are considered by Pallets-R-Us Pty Ltd?
Question 37: What other machinery is the business of Pallets-R-Us Pty Ltd currently using in the
business?
Question 38: What methods are used by the business for selecting the best possible machinery in
the market? Is the method used by the business reliable or not?
Question 39: What are the collaterals which the business is considering for the loan?
Question 40: Will the business be able to effectively service the loan with the given level of income
of the business?
Question 41: What policies are formulated by Pallets-R-Us Pty Ltd towards risk management of the
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business?
Question 42: Have you considered purchasing a second-hand model of the machinery?
Question 43: Have you conducted NPV analysis for the machinery option and an alternative option
for estimating future cashflows?
Question 44: Could you provide some details regarding the current disposable income of Pallets-R-
Us Pty Ltd?
Question 45: Have you taken any loan from other financial institution?
Question 46: Does the business of Pallets-R-Us Pty Ltd have an understanding of Gearing and
Solvency ratios?
Question 47: In case a better model is available in the market I next five years will the business
consider replacement options?
Question 48: What is the expected level of depreciation of the machinery and what method of
reporting for the same is considered by the business of Pallets-R-Us Pty Ltd?
Question 49: Have the business considered leasing or hire purchase options?
Question 50: Have the business consider the useful life, impairment losses and residual value of the
machinery?
Assessor feedback for Task 1a:
Resubmission required?
No
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Task 2a —Develop complex broking options
You are required to prepare a full report addressed to Ray and Steve outlining available loan options; the
process and the risks (potential and real) of which they should be made aware.
In a suitable report format you should cover the following:
1. the parties to the loan
2. outline the type of letter of credit (LC) likely to be used, the parties to the LC and the high-level steps
involved in setting up and establishing LC to enable import of the equipment
3. the product options that are available to finance an equipment purchase once it has arrived in Australia
4. your recommendation of best product option, including amount, security/collateral, term, potential
interest rate and residual value (if any)
5. name three (3) lenders that would consider and potentially approve this transaction and advise Ray
and Steve about product type, loan term, interest rate, balloon payment (if applicable) and monthly
repayment they offer
6. the procedure to commence the import of the equipment and the loan, including documentation Ray
and Steve need to provide
7. the client responsibilities, so Steve and Ray fully understand the facility being proposed
8. outline the risks (potential and real) of which Ray and Steve should be made aware
9. whether personal guarantee will be required from the Director’s spouse
10. a summary of all fees and charges — including those for setup and those of the lender
11. advise which relevant disclosures need to be made
12. a request for client to inform you of any questions about the transaction and/or provide an
instruction to proceed.
(800 words)
Notes: Any assumptions you make should be listed, and not be in conflict with the case study information
already provided.
You are to write a report to your clients, demonstrating your professional writing skill — not simply
commenting on each of the points detailed above.
The use of tables in the report to set out some of the numeric information may be of benefit.
Student response to Task 2a
Dear Ray and Steve
You are both the owners of Pallets-R-Us Pty Ltd and the company is jointly owned by both of
you. The business intends to achieve financial aid to purchase the machinery which can bring
about improvement in the operations of the business.
The report aims to provide insights regarding the risks which the business can face while
purchasing the machinery and also considers the applicability of loan provision which can be
made available to the business. The report also shows the available resources of the business
and the various loan schemes which the business can use. The report also considers possible
sources of loan which the business can apply from and the details for the same are explained
below:
Pallets-R-Us Pty Ltd Year 1 Year 2
Net profit after tax $200,000 $220,000
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