ASSIGNMENT 1 BRIEF
QualificationBTEC Level 5 HND Diploma in Business
Unit number and titleUnit 4: Managing Finance Resources and
Decisions
Assignment issuedAssignment due
Assessor name
Exam titleAssignment 1: Sources of FinancePurpose: The purpose
of this Assignment is to provide learners with an understanding of
different sources of finance and the implications of finance as a
resource within a business.Sample question:You are currently
working for a prestigious milk producer in Vietnam. Due to the
global financial crisis and the increasing level of competition,
your firm has had a year of not-as-expected sales and profit.
Hence, the firm has decided to invest in a strategic project to
develop a new brand of Diet milk product in the next year, which is
more risky than any other existing projects of the firm. The
project requires an initial investment equivalent to 15% of the
Firms total assets. If it succeeds, the project will place the firm
at the top place of Milk products supplier in Vietnam and bring
huge profit prospect for the firm. However, if it fails, your
company will face the threat of declaring bankruptcy. Now, your
firmhas to find a relevant source of finance to sponsor the new
Project. In the role of a CEO, you need to:1. Identify all the
possible sources of finance available to this Firm.
2. Assess the implications of the equity and debt financing for
this Firm. Analyze tangible and opportunity costs, and tax effect
of these two sources. Based on you analysis, make decision on the
sources of finance that you will use for this project.
Aims of the ExamThis exam satisfies the following learning
outcomes:
LO 1 Understand the sources of finance LO 2 Understand the
implications of finance as a resource within a business
Specific requirements
(see Appendix for assessment criteria and grade descriptors)-
Task 1: Identify all the possible sources of finance available to
the firmTask 1.1: Use information from the question and
understandings of Vietnamese market to identify all possible
sources of finance that the firm can assessTask 1.1 produces
evidence for assessment criterion 1.1 overview of companyTask 1.2:
Assess the implications of equity and debt financingwith the
discussion of advantages, disadvantages when using each source of
finance, applied for this specific Firm and justified by recent
knowledge of the Firm and the economy.
Task 1.2 produces evidence for assessment criterion 1.2 - Task
2: Assess the implications of equity and debt financing and make a
decision on the sources of finance to be used for this project tnh
15% ca d n = 15% . total asset. Task 2.1: Calculate cost of
capital.Task 2.1 produces evidence for assessment criterion 2.1
Task 2.2: Assess the information needed for a CEO to make decision
(i.e.All the financial information including profitability,
financial strength, operating efficiency and all the non-financial
information including industry and economy prospects, current
international economic situation and any relevant information you
may think of). Analyze those information in the case of this
specific Firm.Task 2.2 produces evidence for assessment criterion
2.2Task 2.3: Decide on the most appropriate source of finance for
this project.Show justification to support your decision using
these criteria: legal, financial and dilution of control
implications; bankruptcy and availability of sources.Task 2.3
produces evidence for assessment criterion 2.3
Student guidelinesGL 1. This assignment is in the form of a case
study. It is supposed to be done at home individually.GL 2: For
each semester, the lecturer will assign one specific firm for your
analysis. Hence, in your report, you should include a brief
introduction about the Company Background.
GL 3. In this assignment, you should write your answer in
academic style, although a formal report outline will not be
required.
GL 4. You could use figures, pictures, diagrams and tables where
appropriate to enhance your argument. Remember to reference the
sources. GL5. You should use in-text references and a list of all
cited sources at the end of the essay (Harvard Referencing
Style).
GL6. Your report should be no less than 1500 words in length
(excluding the appendices and references).
GL7. In order to produce a good report, you should conduct a
secondary and a simple primary research.
Submission requirementsYou are expected to submit both soft and
hard copy of this assignment to your instructor on the due date.
Evidence of primary research (if any) must be included in the
Appendix.
No late submission is allowed.
APPENDIX: ASSESSMENT CRITERIA AND GRADE DESCRIPTORSLearning
outcomesAssessment criteria for PASS
To achieve a pass grade the evidence must show that the learner
is able toGrade descriptors for MERITTo achieve a merit grade the
evidence must show that, in addition to the pass criteria, the
learner is able toGrade descriptors for DISTINCTIONTo achieve a
distinction grade, the evidence must show that, in addition to the
pass and merit criteria, the learner is able to
LO 1 Understand the sources of finance1.1 Identify the sources
of finance available to a business1.2 Assess the implications of
the different sources (Advantages and disadvantages of each
source)
M1. Identify and apply strategies to find appropriate solutions
(at least one criterion):
- Effective judgments have been madeto justify whether each
source of capital is applicable to this Firm. The reasons why some
sources could not be used in this case have been sufficiently
discussed.-Relevant theories and models (eg. CAPM, WACC) with more
than one variables have been applied in this case to analyze the
cost of finance. M2. Select/design and apply appropriate
methods/techniques (at least 2 criteria)- Relevant financial
theories and techniques (eg. Trade off theory, Perking order theory
M&M) have been applied to analyze the decision criteria and
determine the most appropriate source of finance for the Firm-
Complex information and data of the Firm and the economic situation
have been synthesized and processed to arrive at a conclusion- A
range of sources of information from the text book and other
reading materials(company financial report, economic report,
banking documents)have been used. And your source of information
has been clearly referred throughout the text.M3. Present and
communicate appropriate findings (at least 2 criteria)- The
appropriate structure and approach for the answer has been used to
show the logic of your conclusion. The analyses have been arranged
in an order that step by step explain your choice of capital
source.- Coherent, logical development of the analysis of costs and
implications of each capital source is employedand clearly
explained for both finance and non-finance background audiences
-Technical conceptshas been accurately used and explained; and
English language is used appropriatelyD1. Use critical reflection
to evaluate own work and justify valid conclusion (at least 1
criterion):
-Conclusions have been arrived at through synthesis of justified
ideas and analysis of the advantages and disadvantages of this
specific Firm when using different sources- Realistic improvements
have been proposed to integrate other perspectives (the economic
condition, the riskiness of the Firm, competitors situation,)which
are not in the textbook in the analysisD2. Take responsibility
managing and organizing activities (at least 1 criterion):
-Accommodate the unforeseen problems of using each type of
capital source by using different forecasting techniques
-Substantial investigations into the Firms situation have been
planned, managed and organized: Description of data collection
needs to be included in the Company Background section. D3.
Demonstrate convergent/ lateral/ Creative thinking (at least 1
criterion):
-The choice of capital source is strongly supported by practical
evident throughout the text. The decision is arrived as the result
of the ideas you raised and analyzed throughout the assignment.-
Problems have been solved in a creative manner, in which you may
choose a different set a criteria that may be not mentioned in the
textbook to support your choice of capital source. Make sure to
support your criteria with either practical or theoretical
background.
LO 2 Understand the implications of finance as a resource within
a business
2.1 analyze the costs of different sources of finance2.2 Assess
the information needs of different decision makers2.3 Evaluate
appropriate sources of finance for a business project
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