Complex Lending and Broking Assignment (DIPMB2_AS_v2)

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Written Assignment
Complex Lending and Broking
(DIPMB2_AS_v2)
Student identification (student to complete)
Please complete the fields shaded grey.
Student number
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 are included in
the purchase price of $800,000. They need to import the machine from the US. Initial inquiries
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.
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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 dependents. 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 principal
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
Questions which will be asked to the client:
 What is the condition of the current condition of financial stability and liquidity?
 What was the profit margin of the company in the recent two years because profitability is one of the
most crucial factors for each business and the good level of profitability is required to borrow funds
from the market?
 What are the conditions of current year profits? Is glorious trend of profitability will be continued this
year also?
 In whose joint name they manufacture metal pallets?
 In which name Ray Murdoch and Steve Brown trade?
 By using what type of material they manufacture pallets?
 What type of approach did they adapt to research and development for engineering and design of
pallets?
 For maintaining their cost of sales and forecasting sales what type of needs does Ray and Steve have to
maintain?
 For how long Ray and Steve have been trading?
 In which type of sectors pallets have been used?
 What provides Ray and Steve with repeat “business to business” dealings?
 Do they have a solid business plan and if, yes then what type of contracts they have?
 How many business clients they have?
 How many major business clients and smaller business clients Ray and Murdoch deal with?
 What Ray and Murdoch require to purchase the machine?
 What Ray and Murdoch used to purchase the machine?
 Why does this machine need to be programmed?
 The expected commercial lifespan of the machine is?
 In how many years the operating software of machine needs to be updated?
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 What is the purchase price of machinery?
 Does software and up gradation of machinery is included in the purchase price of machinery?
 From where do they need to import the machinery?
 What does initial inquiry with the US inquiry have indicated?
 What are the compound characteristics does Ray and Murdoch had to face in purchasing and importing
the machinery?
 To how many employees Ray and Murdoch provide employment?
 How many more employees Ray and Murdoch need to recruit?
 At what time they need to recruit these employees to meet sales/ production demands?
 Is there any expected increase in production through automation of production?
 Does the company have forecasted these potential benefits of automating the production at the time
of purchasing of machinery?
 In which field Ray had been worked all his working life?
 What qualification does Ray possess?
 Does Ray understand financial management?
 Who among both of them possess solid engineering skills?
 Who had developed the majority of design works for the business?
 Is Ray married?
 Is there any person who is dependent on Ray?
 What Ray ‘s wife does and when she will retire?
 What is the financial condition of directors? Is there any financial obligation which has to be satisfied by
directors personally?
 What was the income of directors in recent 2 years? This question is very crucial because repayment
capabilities of the company also depend on the individual income of directors.
 Do directors have any personal debt obligation which will need to be satisfied in the coming years?
 What if the machinery fails to satisfy the needs of the company and what impact it will have on the
financial stability of the company?
 What is the condition of debts? Is there any debt which is not shown separately? This question is very
crucial and demands additional research because borrowing capabilities of an organization depend on
the balance of existing debts.
 What are the fixed annual payment obligations of the company and how it will affect the overall
financial stability?
 Explain the key terms of policy which is followed by the company to regulate the debtor issues. For
example, how many days of credit are allowed to debtors? What are the conditions of payment? Are
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debtors being well spread or not?
 What are the conditions of revenue? Which types of trends are expected in the coming years? Is there
any advancement which will support the future sales of the company?
 What are the conditions of the creditor? What is the policy of payment to creditors? Is the company
having sufficient power of bargaining or it is facing problems to get credit from suppliers?
 What are the business risks that are associated with new machinery? What happens if new machinery
will not work as per expectations? Will it create a threat to going-concern?
 Adoption of the new machine will create an obligation of fixed outflow of funds and how this obligation
will be satisfied if the company will face a significant reduction in revenues.
 How many employees are currently working with the company? What are the annual wages of them?
 What is the current condition of cash and bank balances? Are cash assets being available to finance the
machinery upgrade?
 Is there any complexity regarding the utilization of the new machine is investigated properly? This
question is crucial because Import of new machinery comes with many complexities. For example, it is
possible that specific knowledge will be required to successfully operate the new machine.
Assessor feedback for Task 1a: Resubmission required?
No
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