ACC501 Assignment No 1 Solution Fall 2017

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ACC501 Assignment No 1 Fall 2017

Dear Students, Here you can read or Download ACC501 - Business Finance Assignment No 1 Solution and Discussion of Semester Fall 2017. Assignment Due Date is 22 January, 2017. Total Marks are 30. ACC501 Assignment Solution has been added. We are here to facilitate your learning and we do not appreciate the idea of copying or replicating solutions. Previously we shared ACC501 Quiz No 3 Screenshots Spring 2017.

ACC501 Assignment No 1 Solution Fall 2017

ACC501 Assignment Deadline:

Make sure to upload the solution file before the due date on VULMS.
Any submission made via email after the due date will not be accepted.

ACC501 Assignment Formatting Guidelines:

Use the font style “Times New Roman” or “Arial” and font size “12”.
It is advised to compose your document in MS-Word format.
You may also compose your assignment in Open Office format.
Use black and blue font colors only.

ACC501 Assignment Rules for Marking:

Please note that your assignment will not be graded or graded as Zero (0), if:

It is submitted after the due date.
The file you uploaded does not open or is corrupt.
It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
It is cheated or copied from other students, internet, books, journals etc.

ACC501 Assignment Learning Objectives:

After attempting this assignment, you will be able to:

Understand the different capital budgeting techniques.
Calculate projected net cash flows by considering the effect of depreciation and taxes.
Evaluate any proposed project by using different capital budgeting techniques.
Derive inferences after critical analysis regarding the acceptance/rejections of the project.

The Case:

Mr. Imran wants to establish a business of manufacturing spare parts of 70cc motorcycle. He estimates a start-up cost of business with heavy machinery of worth Rs. 30 million. He further projects that the revenue (before tax and depreciation) from the business will be Rs. 8 million for the first year and it will keep on growing at a rate of 4% annually up to year 6. Some other information regarding the project is as follows:
The machinery is fully depreciated under the straight-line method till the end of year 6.
Cost of capital is 8% while the tax rate is 40%.
As per an estimate, the machinery dismantling and the site restoration would require an outlay of Rs. 5 million; while the machinery would not be able to fetch any sale price.
Being a financial consultant of Mr. Imran, you have to conduct a feasibility analysis for his project. You have to suggest Mr. Imran about the viability of the project after performing different Capital Budgeting techniques.

ACC501 Assignment Requirement:

Keeping your task into consideration, provide answers to the following:

Calculate projected net cash flows for 6 years. (10 Marks)

Evaluate the project by using the following capital budgeting techniques:

Payback Period (The desired payback period is 4 years) (04 Marks)
Net Present Value (8 Marks)
Profitability Index (03 Marks)
Comments if there is any difference in the results among the above used techniques? Would you recommend Mr. Imran to start his business based upon your analysis? (05 Marks)

Special Note:
Complete calculations are required for Part (1) and Part (2). Incomplete calculations will result in loss of marks.

Recommended : ACC501 BUSINESS FINANCE COURSE CONTENTS