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Posted: February 11th, 2024

AF3U097_JAN Assessment Cover Sheet

FACULTY OF BUSINESS AND
CREATIVE INDUSTRIES
South Wales Business School
Assessment Cover Sheet
2023-24
Module Code:
AF3U097_JAN
Module Title:
Financial Management
Module Lecturer:
Claudia Scicluna
Assessment Title and Tasks: Grove Co – Capital
Investment
Assessment No. 1
Weighting: 30% Word count: 2,000
Date Set:
January 2024
Submission Deadline:
ONLINE via Unilearn
(Blackboard)
by 23:59 on Monday 19
February 2024
Return Date:
By 5.00pm on 18 March 2024
Part A: Regulations and Support
Extenuating Circumstances:
If there are any exceptional circumstances that may have affected your ability to undertake
or submit this assignment, make sure you contact the Advice Zone on your campus prior
to your submission deadline.
https://advice.southwales.ac.uk/a2z/extenuating-circumstances
Fit to sit policy:
The University operates a fit to sit policy whereby you, in submitting or presenting yourself
for an assessment, are declaring that you are fit to sit the assessment. You cannot
subsequently claim that your performance in this assessment was affected by extenuating
factors.
Referencing, Plagiarism and Good Academic Practice:
When submitting this assessment, you will be asked to declare that it is your own work
and that the sources of information and material you have used (including the internet)
have been fully identified and properly acknowledged as required1. Additionally, the work
presented should not have been submitted for any other assessment.
You are reminded that you should not submit assessments where generative artificial
intelligence (GenAI) platforms, such as ChatGPT, have contributed to the development of
(eg written) all or part of your assessment, unless specified as part of the assessment
brief. The inappropriate use of GenAI falls under the definition of Contract Cheating, as a
commissioning offence, and would constitute an academic offence at USW.
You should also understand that the Faculty reserves the right to investigate allegations
of plagiarism or unfair practice which, if proven, could result in a fail in this assessment
and may affect your progress.
https://advice.southwales.ac.uk/a2z/referencing-plagiarism-and-good-academic-practice

1
University Academic Misconduct Regulations
Submission Details:
You are required to submit your assignment online via Unilearn (Blackboard). When you
do this, a Turnitin score will be generated. Turnitin is a tool used by USW to help detect
and discourage plagiarism and to encourage good referencing skills. When you have
viewed your Turnitin score, you will have the opportunity to make changes, update
references and resubmit an assignment (as long as it is before the submission date).
Please note however that it may take up to 24 hours to generate the new report score.
A guide for students (including how to submit your assignment and view your Turnitin
score) can be found at:
https://its.southwales.ac.uk/unilearn/turnitin/
If you fail to submit an assessment on time, without extenuating circumstances, we will
allow you a further five working days to submit the work, but this work will be awarded a
maximum mark of 40%. If you fail to submit work within this five-day period, without
extenuating circumstances, you will fail the assessment concerned and receive 0%. The
only exception to this is if you have an Individual Support Plan (ISP) in place, in which
case the work submitted within this five-day period will not be capped.
(Advice Zone to be consulted https://advice.southwales.ac.uk/).
Learning Support Resources:
Support is available if you need help with report writing skills, referencing, how to lower
your Turnitin score, working in a group, organising your time etc. You can download
guides, go to a drop-in session, arrange a tutorial or get support via Skype or email. For
more information on Study Skills go to the Advice Zone on B floor at City Campus or visit
https://studyskills.southwales.ac.uk/.
If you need help with finding appropriate resources for your assignment, you will find
useful information at https://library.southwales.ac.uk/, such as FINDit (use to search for
resources), specialised subject guides, guides to referencing and live chat to get you
started. You can also make an appointment to meet with your Information librarian if you
need more specific help.
What happens next?
Your marked assessment should be available 20 working days after submission.
However, please be advised that this may be subject to change in the event of Bank
Holidays, University Closure or staff sickness. If there is something about the feedback
you have been given that you are unclear about, please contact your module tutor.
Feedback Method:
You will be able to view your marked assignment on Unilearn (Blackboard) after the return
date. Your feedback will include an overall grade and feedback on your performance in
relation to each of the grading criteria in Part B below. The FBCI Marking Criteria for
Undergraduate Assessments is also considered in arriving at your overall grade.
Feedback should help you to identify areas where you have performed well and areas
where you could improve for future work.
In addition, there may be some general feedback about the assignment which will indicate
areas which differentiated between stronger and weaker performances in the tasks set.
PLEASE REFER TO YOUR STUDENT HANDBOOK AND THE REGULATIONS FOR
TAUGHT COURSES FOR FURTHER INFORMATION RELATING TO ASSESSMENTS
IT IS YOUR RESPONSIBILITY TO KEEP A RECORD OF ALL WORK SUBMITTED
Part B: Marking and Assessment
(to be completed by Module Lecturer)
This assignment will be marked out of 100%
This assignment contributes to 30% of the total module marks.
This assignment is non-bonded.
Assessment Task:
An individual word-processed report, not exceeding 2,000 words based on the requirement, referenced in
accordance with the Harvard system.
Retrieval in the Event of Failure:
In Year Retrieval of failed assignments may be feasible. Please speak to your tutor in the event of failure
to discuss your options. Full details can be found here: In Year Retrieval | University of South Wales
If In Year Retrieval is not applicable or not successful, a replacement assignment will be issued during
the resit period.
Learning Outcomes to be assessed (as specified in the validated module descriptor
https://icis.southwales.ac.uk):
B Assess and discuss the impact of the economic environment on financial management
D Carry out effective investment appraisal
I Display competence in a range of soft/transferable skills including employability and
technology skills.
The following soft skills are addressed in this assignment:
 Report writing
 Case study analysis and problem solution
 Research and information gathering
 Practical computer skills
Grading Criteria:
Note: All grades are provisional until they are ratified by the exam board
Section Weighting Criteria (all sections)
1 NPV calculation 25%
See the FBCI marking criteria for
undergraduate level assessments
2 Advice on different capital investment
methods 10%
3 a) Probability and Expected value 16%
b) Sensitivity analysis 15%
4 Impact of economic factors on business
and consumer 24%
5 Report structure, layout and referencing 10%
The weightings provided above give an indication of the relevant importance of each area of the
assignment and may be used to help plan your allocation of time and the available word count.
Faculty of Business and Creative Industries ‐ Marking Criteria for Undergraduate Level Assessments
Knowledge, Understanding
and Relevance
Argument, Analysis and
Evaluation Application Communication Research/Information Literacy Practical Skills (referencing)
0-29% The assignment has insufficient evidence of the knowledge, understanding and skills appropriate to the level of the qualification. The work is weak in most, if not all, of the above indicators
30-39%
A limited understanding is
shown of a narrow range of
material. The content of the
assignment has little relevance
to its requirements
There is very little, or no,
evidence of analysis or
evaluation in the
assignment. It is heavily
dependent on description
A limited assignment that
demonstrates an
overwhelmingly unsuccessful
attempt to apply appropriate
knowledge to the issues
contained in the assignment
An assignment with
numerous deficiencies in
expression, presentation
and structure
The assignment is based on an
inadequate use of literature, often
with an over reliance on basic
textbooks and class materials
Much of the information in the
assignment has not been properly
referenced in accordance with the
system of referencing prescribed in the
course documentation.
40-49%
A basic understanding of the
subject is shown, but only a
limited range of material is used.
There is a significant degree of
irrelevance.
There is little evidence of
analysis or evaluation in
the assignment – it is
largely descriptive
Limited application of
appropriate knowledge to the
issues contained in the
assignment is demonstrated
An assignment with a simple
basic style but with
significant deficiencies in
expression and/or structure
The assignment utilises a narrow
range of relevant sources, displaying
limited information literacy skills in
respect of research & accessing
sources. It fails to distinguish
relevant and appropriate sources
from those that are not and/or uses
relevant and appropriate sources in
an inadequate manner
Some of the information in the
assignment has been properly
referenced in accordance with the
system of referencing prescribed in the
course documentation
50-59%
Adequate knowledge of a fair
range of relevant material is
shown, with intermittent
evidence of an appreciation of
its significance. The assignment
seeks to address the
requirements of the assessment,
but it also contains parts that are
not directly relevant.
Some analytical treatment
is displayed, but the
assignment tends to be
more descriptive than
analytical. There is some
evidence of evaluation of
the issues contained in the
essay, but it is of limited
scope.
Satisfactory application of the
appropriate knowledge to the
issues contained in the
assignment is demonstrated but
it also indicates clear limitations
in this respect
A competently written
assignment, with only minor
lapses from standard
grammar, and a satisfactory
structure
The assignment utilises a
satisfactory range of relevant
sources, displaying good information
literacy skills in respect of research
& accessing sources, distinguishing
the most relevant and appropriate
sources, and uses them in the
assignment in a competent manner
Most of the information in the
assignment has been properly
referenced in accordance with the
system of referencing prescribed in the
course documentation
60-69%
There is a substantial knowledge
of relevant material, showing a
clear grasp of themes, questions
and issues therein. The
assignment is consistently
focused on being relevant to the
requirements of the assessment
A good, clear and orderly
analysis of the issues and
a good level of evaluation
of the issues contained in
the assignment is
displayed
A good, clear and orderly level
of application of appropriate
knowledge to the issues
contained in the assignment is
demonstrated
A well written assignment,
with good grammar and
spelling, in a readable style
with a good structure
The assignment utilises a good
range of relevant sources, displaying
very good information literacy skills
in respect of research & accessing
sources, distinguishing the most
relevant and appropriate sources,
and uses them in the assignment in
a largely effective manner
The vast majority of the information in
the assignment has been properly
referenced in accordance with the
system of referencing prescribed in the
course documentation
70-79%
A full and comprehensive grasp
of the subject matter is shown
throughout the assignment and
how it applies to its themes,
questions and issues
A full and comprehensive
level of critical analysis
and evaluation of the
issues contained in the
assignment is displayed
A full and comprehensive level
of application of appropriate
knowledge to the issues
contained in the assignment is
demonstrated
The assignment displays a
sophisticated level of writing,
displaying very good clarity
of argument, a coherent and
organised structure and
provides well-evidenced and
coherent insights
The assignment utilises a wide
range of relevant sources, displaying
excellent information literacy skills in
respect of research & accessing
sources, distinguishing the most
relevant and appropriate sources,
and uses them in the assignment in
a very effective manner
The assignment has been properly
referenced throughout, in accordance
with the system of referencing
prescribed in the course
documentation
80-89%
An excellent grasp of the subject
matter is shown throughout the
assignment and how it applies to
its themes, questions and issues
An excellent grasp of the
subject matter is shown
throughout the assignment
and how it applies to its
themes, questions and
issues
An excellent level of application
of appropriate knowledge is
demonstrated
The assignment
demonstrates a very
sophisticated level of writing,
displaying excellent clarity of
argument, a coherent and
organised structure and
original, well-evidenced and
coherent insights
The assignment utilises a wide
range of relevant sources, displaying
outstanding information literacy skills
in respect of research & accessing
sources, distinguishing the most
relevant and appropriate sources,
and using them in the assignment in
an excellent manner
The assignment has been properly
referenced throughout, in accordance
with the system of referencing
prescribed in the course
documentation.
90-100% A piece of work which displays exemplary evidence of complete understanding of the concept under discussion across all categories and criteria, and which provides evidence of scholarly excellence and originality
1
AF3U097 FINANCIAL MANAGEMENT
ASSIGNMENT FEBRUARY 2024
INDIVIDUAL REPORT
Assessment Description
Grove Co are based in Bridgerland, a country which continues to experience economic
pressures such as high inflation and interest rates, high costs of power (utilities and
fuel for vehicles) and disrupted supply chains. These conditions have made business
operations more difficult and affected the cost of living for employees and customers.
Grove Co manufacture clothes ranging from luxury, designer-fashion items, to a basic
range known as ‘Essentials’. The directors are appraising two projects which are at
different stages of development and have asked for your advice.
Project 1: investment in new equipment and facilities to manufacture clothes
G90 and M04.
Marketing trials, which cost $350,000, have shown that clothing items G90 (luxury
range) and M04 (essentials range) have been popular with customers. Directors are
proposing to start wide scale production, subject to the following capital appraisal.
The project will require investment in new equipment costing $10.5 million which will
be acquired at the outset.
The following information is available:
G90 M04
All $ figures
are quoted in
current
terms.
Selling price $45 per unit $12
Variable costs $15 per unit $5

Inflation has been estimated as follows for both items:
 Selling price: 4% in years 1 and 2, then 5% per annum until the end of the
project.
 Variable costs: 6% in year 1, and 8% per annum in the remaining years of the
project.
Both products will be produced for 6 years.
Production units G90 M04
Annual production units in year 1 70,000 120,000
Annual increase in production units in years 2 – 4 10% pa 20% pa
Production levels will remain at the year 4 units until the end of the 6 years.
2
Project 1 will incur $455,000 incremental overheads in current terms and take a share
of $1.5 million head office overheads. Inflation of 7% per annum is expected until the
end of the project.
$300,000 of working capital investment is required at the beginning of the project and
needs to be maintained at 5% of the total revenue for each forthcoming year, until the
end of the project when working capital will be released.
Professional fees of $380,000 in nominal terms are estimated for both year 1 and year
2. 85% of these are estimated to be tax allowable.
Capital allowances are available at 25% reducing balance for the equipment. The
equipment is expected to have a residual value of 8% of its original cost, at the end of
the 6 years.
Assume that the first capital allowances are claimed at the end of year 1.
Tax which is due at 20% on profits is payable one year in arears. There are available
profits elsewhere in the group to offset any surplus capital allowances or tax losses.
The directors feel that a cost of capital of 11% is an appropriate cost to appraise this
project.
Assume that all cashflows occur at the end of the year in which they arise unless stated
otherwise.
The directors have instigated further analysis work to assess the financial environment
and the possible economic conditions which may impact on the forecasts for demand
for G90 and M04. The aim of this work is to calculate probabilities which could be used
to refine the results of the investment appraisal process.
Product M04 is considered a basic item and demand is not considered to be very
elastic, whereas G90 is considered a luxury item.
Project 2: Product K57
The directors are also considering a project to produce the K57. Project 2 is a fiveyear project and the following present values and NPV have been calculated using a
cost of capital of 11%:
Present value NPV
$000 $000 $000
Investment -1,350.00 -1,350.00
Sales revenue 1,700.00 6,283.20
Variable costs -1,100.00 -4,065.60
Overheads -200.00 -739.20
128.40
3
The directors are concerned that they do not have enough information about how the
cashflows and a change in the cost of capital could affect the project and have asked
you for advice on how they could identify the cashflows that are most risky and which
might require further investigation.
Required:
Prepare a report for the directors of Grove Co to include the following:
1. A calculation of the net present value (NPV) and advice, for the directors of
Grove Co, on the viability of the proposed investment in project 1 (G90 and
M04). A detailed analysis showing how the NPV has been calculated should be
included as an appendix to the report, together with any assumptions and
related calculations. It is recommended that you round the prices/costs per unit
to 2 decimal places. ($0.00)
2. A discussion about why the net present value investment appraisal method is
preferred to other methods such as payback, accounting rate of return and
internal rate of return.
3. Advice to the directors of Grove Co on how they can incorporate risk into
projects 1 and 2 to include:
a) A critical discussion of the use of probability analysis to incorporate risk into
investment appraisal. An explanation of how the expected value could be
used to take account of the variability in the economic environment for
Project 1. You are NOT required to do any calculations for this task.
b) An evaluation of the use of sensitivity analysis and an illustration of how
sensitivity analysis could be used to help identify the cashflow that is most
risky in Project 2. Calculate the sensitivity of Project 2 to a change in:
i. The initial investment
ii. Sales revenue
iii. Variable costs
iv. Overheads
v. The cost of capital
4. An analysis of how key factors in the economic environment can impact on
businesses such as Grove Co and on consumers such as employees and
customers. With reference to real world examples, identify four different factors
in the economic environment that affect businesses and/or consumers. For
each factor analyse the impact this factor has on businesses or consumers and
how this may affect decisions they make. Relate your examples to Grove Co
where relevant.
Marks are also available for the presentation and structure of the report and use and
presentation of references in line with the Harvard scheme of referencing.
4
Guidance on Format of Assessment:
Note: Students are reminded not to include this assignment brief with the assignment
submission.
Your work should be word processed, clearly laid out and concise. Calculations should
be performed & presented on a spreadsheet. Your spreadsheet workings together with
a printout showing the cell formulas you have used should be included in your
appendices.
The word count for this assignment is 2,000, and you should aim for a length within
10% of this i.e. +/-200 words. Any words beyond this limit will not be marked and hence
will not contribute to your grade. Any work significantly shorter than this is unlikely to
meet all the assessment criteria and you should consider carefully what else you need
to include.
The word count should be displayed at the end of the report. The word count starts at
the beginning of your introduction and ends with your conclusions/recommendations.
It does not include contents pages, reference lists, bibliographies or appendices.

All referencing should be in accordance with the Harvard system. A guide can be
found at:
https://library.southwales.ac.uk/collections-subject-guides/referencing/
You should demonstrate that you have utilised multiple literature sources from the
academic, professional and technical literatures. Please note that sites such as
Wikipedia and Investopedia, whilst useful as a starting point for your research, are not
suitable sources for your assignment.
The main text shall be not less than 12pt and one-and-a-half or double line spacing
should be used.
Hand-in requirements and dates:
 The file should be a Word document (2003 or later) or pdf and should use the
following naming convention: Student no AF3U097 FM Assignment February 2024
(please replace the highlighted text with your own student no)
 It should be submitted via Unilearn (Blackboard) for the FM module
(AF3U097) by 23:59 on Monday, 19 February 2024.
Late Submission:
PLEASE NOTE THAT IF YOU ARE EVEN ONE MINUTE LATE UPLOADING YOUR
FILE THIS WILL COUNT AS A LATE SUBMISSION AND THE APPROPRIATE
PENALTY WILL APPLY.
Students with an Individual Support Plan (ISP) may submit within the five working day
grace period without penalty.
Please use the separate submission point if you have an ISP and/or are submitting
your assignment during the five working day grace period.
Financial Management Report for Grove Co

Introduction

In the current economic climate, businesses face various challenges, particularly in countries experiencing high inflation, interest rates, and disrupted supply chains. Grove Co, a clothing manufacturer, operates in such an environment and is considering two investment projects. This report provides an analysis of these projects, focusing on capital investment appraisal, risk assessment, and the impact of economic factors on business and consumers.

1. Net Present Value (NPV) Calculation for Project 1: G90 and M04

The NPV method is utilized to assess the viability of Project 1. Detailed calculations are provided in the appendix. Considering the cash flows, investment outlay, and cost of capital, the NPV is determined to provide a comprehensive understanding of the project’s potential profitability.

2. Preference of NPV Method over Other Investment Appraisal Techniques

The NPV method is preferred over other techniques like payback, accounting rate of return, and internal rate of return due to its consideration of the time value of money, comprehensive evaluation of cash flows, and alignment with shareholder wealth maximization objectives. It accounts for project risk and provides a clear basis for decision-making.

3. Incorporating Risk into Projects 1 and 2

a) Probability analysis is essential for incorporating risk into investment appraisal. While not directly calculating probabilities, understanding the variability in economic conditions through expected values aids decision-making for Project 1.

b) Sensitivity analysis is crucial for identifying the most risky cash flows in Project 2. By analyzing the impact of changes in various factors such as initial investment, sales revenue, variable costs, overheads, and the cost of capital, decision-makers can prioritize areas requiring further investigation.

4. Analysis of Economic Factors Impacting Grove Co and Consumers

Various economic factors impact businesses and consumers. For Grove Co, factors such as inflation, interest rates, supply chain disruptions, and consumer preferences play significant roles. Real-world examples demonstrate how these factors affect business decisions, pricing strategies, and consumer behavior.

Conclusion

In conclusion, effective financial management requires thorough investment appraisal, risk assessment, and consideration of economic factors. The NPV method provides a robust framework for decision-making, while sensitivity analysis enhances risk assessment. Understanding the impact of economic factors is crucial for businesses like Grove Co to navigate challenging environments successfully.

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