Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Assignment No...MF
Assignment
ON
MANAGING FINANCE
(CAPITAL BUDGET PROPOSAL FOR NEW DAY
ROOM)
Submitted to:
(.....................................)
Assignment No...MF
Submitted By:
(.................................)
MANAGING FINANCE
(CAPITAL BUDGET PROPOSAL FOR NEW DAY
ROOM)
Assignment No...MF
TABLE OF CONTENTS
ABSTRACT............................................................................................................................ 5
PURPOSE OF THE ASSIGNMENT....................................................................................... 5
THE OBJECTIVE OF THE REPORT IS TO ANALYSE FINANCIAL SITUATIONS AND MAKE FINANCIAL
JUDGEMENTS BASED ON ACCOUNTING ANALYSIS , BESIDES THAT PREPARE PROPOSALS FOR
EXPENDITURE ON A PROJECT IN ALTERNATIVE CHOICES. ............................................................5
INTRODUCTION.................................................................................................................... 5
BACKGROUND..................................................................................................................... 6
TASK-(1) DETAILED BUDGET FOR DAY ROOM WITH STANDARD FITTINGS................6
RESOURCE RATES.....................................................................................................................6
FIXED COSTS.............................................................................................................................6
PER- USE COSTS.......................................................................................................................6
(1. A) RENOVATED AND EQUIPPED WITH STANDARD FITTINGS................................... 8
(1. B) BUILDING AND EQUIPPING A NEW EXTENSION.................................................... 9
(II) ESTIMATION OF COST OF EACH PROJECT THAT CONFIRMS THE BEST VALUE OR CPA
GUIDELINES AND TAX CONSIDERATION........................................................................................9
II.1.1 COMPREHENSIVE PERFORMANCE ASSESSMENT (CPA)......................................................9
II.1.2 CASH FLOW STATEMENT FOR PROJECT-A = 8,000,000............................................10
II.1.3 CASH FLOW STATEMENT FOR -PROJECT B = 5,000,000................................................10
TASK-(2) CRITICALLY EVALUATING BOTH PROJECTS A AND B................................. 10
PAY BACK PERIOD...................................................................................................................11
Assignment No...MF
Assignment No...MF
ABSTRACT
To demonstrate how critically appraised financial theories in real life
organizational settings and evaluation of financial information and assessment
of financial strategies adopted by health care industry for the survival in
changing health care industry and for growth in as global organization.
INTRODUCTION
Managing Finance is the significant success factor of any organization. It
works in public, private, entrepreneurship or partnership. The profit oriented
or non oriented organizations required financial appraisal techniques to
evaluate project proposals and financial information. Moreover it is essential
to assess the financial strategies for survive and grow in competitive global
atmosphere, besides that it helps to avoid the wastage of finance and other
resources.
Assignment No...MF
BACKGROUND
This individual research project demands to prepare a project proposal for a
new room for the local community with two alternatives to investigate that a
renovation and construction of a new extension by examining the best value
or comprehensive performance assessment guidelines.
Resource Rates
1. The cost of resources based on amount of time that resources spend on
working on the project
2. Rate based material costs of consumable material resources ( building
material or supplies assigned on standard costs)
Fixed Costs
1. Total cost or doing a task or project that regardless of number of resources
assigned, total hours worked or the cost of material used
5,000,000.00
Notes
Excavation
3% Full Basement
150000.00
Structural Concrete
350000.00
Framing
1150000.00
Assignment No...MF
Roofing
150000.00
Windows
200000.00
Plumbing
250000.00
Electrical
250000.00
HVAC
250000.00
Masonry
1% Decorative only
Siding
200000.00
Insulation
100000.00
Drywall
250000.00
Sewer Hook-up
50000.00
Water Hook-up
50000.00
Paint/Stain
Trim Package
50000.00
100000.00
600000.00
Garage Doors
Floor Coverings
350000.00
Appliances
200000.00
Deck
50000.00
Storm water
50000.00
Exterior Concrete
100000.00
Final Grade
Total 100%
50000.00
50000.00
Total 5,000,000.00
Amenities and
environment
Garden
3,000,000.00
210000
Assignment No...MF
Cafeteria
450000
Gift Shop
360000
210000
Television
4% LCD televisions
120000
Comfortable Seating
360000
Wheel Chairs
3% Wheel chairs
Bathrooms
240000
180000
Information Desk
150000
Massage Therapy
210000
Parking
4% Parking services
120000
Spiritual Support
Telephone
Total
100
% Total
Total estimated project cost in
pounds
90000
60000
180000
60000
3,000,000.00
8,000,000.00
2,000,000.0
0
Amenities and
environment
Garden
3,000,000.0
0
210000
Cafeteria
Gift Shop
Wireless Internet Services
Television
Comfortable Seating
Wheel Chairs
15%
12%
7%
4%
12%
3%
Assignment No...MF
Bathrooms
Fun For Kids
Information Desk
Massage Therapy
Parking
Spiritual Support
8%
6%
5%
7%
4%
2%
6%
2%
Total
100
% Total
Total cost for renovation and
facilities
450000
360000
210000
120000
360000
90000
240000
180000
150000
210000
120000
60000
180000
60000
3,000,000.0
0
5,000,000.0
0
(ii) Estimation of cost of each project that confirms the best value or
CPA Guidelines and tax consideration.
Ii.1.1 Comprehensive Performance Assessment (CPA)
The comprehensive performance assessment (CPA) is for to assess the performance of
council, that of their services provided to local people and comparing it with the services
of other councils in U.K. The process will help to: Help councils to focus on improvement
Judgment on councils corporate ability
Improved services to the local people
Holding the leadership of local community (WIRRAL, 2013)
Assignment No...MF
(80,000,000)
(80,000,000)
15000000 (65,000,000)
18000000 (47,000,000)
21000000 (26,000,000)
24000000 (2,000,000)
26000000 24,000,000
The cash flow statement for both project A and B calculated on the basis of income
from the day room facility centre after considering the appropriate adjustments.
cumulative
c.f
0 (50,000,000)
(50,000,000)
10000000 (40,000,000)
13000000 (27,000,000)
16000000 (11,000,000)
19000000 8,000,000
22000000 30,000,000
Assignment No...MF
rate of return (IRR), net present value (NPV), or payback period. Investment
appraisal is an integral part of capital budgeting, and is applicable to areas
even where the returns may not be easily quantifiable such as personnel,
marketing, and training. (Business Dictionary, 2013)
Capital Budgeting is the process by which the firm decides which long-term
investments to make. Capital Budgeting projects, i.e., potential long-term
investments, are expected to generate cash flows over several years. The
decision to accept or reject a Capital budgeting project depends on an
analysis of the cash flows generated by the project and its cost.(Mark A.
Lane, 2002 - 2013 )
The Capital Budgeting Rules are as follows;-
Assignment No...MF
Sensitivity analysis sales volume, sales price, operating costs and capital
expenditure.
(80)
cumulative
c.f
(80)
15 (65)
18 (47)
21 (26)
24 (2)
26 24
Assignment No...MF
Assignment No...MF
cumulative
c.f
Cash Flow B
(50)
(50)
10 (40)
13 (27)
16 (11)
19 8
22 30
= 3+0.579
= 3.58 years
Assignment No...MF
Assignment No...MF
Projects
Investment
Payback
Period
PROJECT A
80,000,000.00
4.076
68896145.8
8.58
PROJECT B
50,000,000.00
3.58
52250139.62
15.63
NPV
IRR
When investing fund in a new project, the following facts to be considered:1. If it generate the cash flows for compensating the cost of capital , then the value
of company not change
2. If it generate more than cash flow for the cost of capital, then the value of
company increasing.
3. If it not generating more than the cost of capital it decreases the value of
company.
The discounted cash flow at the cost of capital let assess how it affects the present value,
if it is:1. Positive- the project returns more than cost of capital
2. Negative- the project returns less than cost of capital
3. Zero- project returns cost of capital.
Assignment No...MF
DECISION RULES
Based on the Payback Period -
Suggestion - Project B
Based on NPV
Suggestion - Project B
Based on IRR
Suggestion - Project - B
Investment
80,000,000.00
50,000,000.00
NPV
68896145.8
52250139.62
%
86.12
104.50
Recommendations
Therefore the project B recommended for execution, that is renovation of existing
building and equipping standard fittings.
Assignment No...MF
1.
2.
3.
4.
5.
6.
7.
Own money
Sale of personal property
Retained profit
Sale of assets and leaseback
Cheque discounting
Working capital requirement
Ownership capital.
7.1 ordinary shares
7.2 preference shares
8. Non ownership capital
8.1 debentures
8.2 Bonds
8.3 Bank loans
8.4 Overdraft
8.5 Hire purchase
8.6 Financial leasing and operating leasing
8.7 Grants
8.8 Trade credit
8.9 Venture capital
8.10 Factoring
8.11 franchising
9. Friends and family
10. Credit cards
11. Home equity credit line
12. Angel investors
The recommended financial source is to use the available government grant and rest
with bank loan.
Assignment No...MF
Assignment No...MF
1.1Introduction
The financial investment decision suggested choosing the Project B for
execution and it achieve the objective by providing the services and the
project connected and continually engaged with NHS for providing good
services to patients and other associated with the government norms.
1.2Key findings
The project is in preliminary stage and preliminary investigation and feasibility
study has over and moving to the execution stage. The next stage focused to
obtain the necessary legal requirements from local authorities and the
execution plan to be implemented after the obtainment of the local authority
permissions. When the renovation and equipping process work continues to
start the functioning of the proposed services.
1.3Recommendations
The investment analysis by various decision making management tools
arrived in a position to suggest and execute the Project B to execute. The
decision tools and decision rules of investment choice recommended the
Project B. The source fund recommended using available government grants
and bank loans.
Assignment No...MF
The fundamental research, planning, drawing has been finished, the next step
to legal and local authority paper works are going on and simultaneously the
project execution negotiations are going on.
Investment
Payback
Period
NPV
IRR
PROJECT A
80,000,000.00
4.076
68896145.8
8.58
PROJECT B
50,000,000.00
3.58
52250139.62
15.63
Assignment No...MF
immediately just after the completion of renovation, the feasibility study shows a
positive result and it will acceptable by stakeholders and the implementation framed in
time and responsible to reach the goal by the Implementation manager.
References
Details available with attached working papers from Task 1 to
Task3
CONCLUSION
The managing finance is essential for to locate sources of finance
and access the cost of capital and its comparison, besides that it
leads to wise investment decisions by which using the appraisal
tools and techniques.
BIBLIOGRAPHY
Achintya Kr. Baruah, M. (2013, February 18). http://assamagribusiness.nic.in. Retrieved
February 18, 2013, from http://assamagribusiness.nic.in:
http://assamagribusiness.nic.in/agriclinics/Entrepreneurship%20concept%20&
%20definition.pdf
Business Dictionary. (2013, February 26). investment appraisal. Retrieved February 26,
2013, from businessdictionary.com:
http://www.businessdictionary.com/definition/investment-appraisal.html
Business Finance Online. (2002-2013). Internal Rate of Return. Retrieved February 25, 2013,
from enwealth.com/BusinessFinanceOnline:
http://www.zenwealth.com/BusinessFinanceOnline/CB/IRR.html
Dees, J. G. (1998, October 31). partnerships.org.au. Retrieved February 18, 2013, from The
Meaning of Social Entrepreneurship:
http://www.partnerships.org.au/library/the_meaning_of_social_entrepreneurship.htm
Dictionary, B. (2013, February 24). organizational politics. Retrieved February 24, 2013,
from businessdictionary.com: http://www.businessdictionary.com/definition/organizationalsocialization.html
Dr.Jon Warner. (2013, August 2). Organizational Change Management Strategies. Retrieved
February 25, 2013, from Ready To Manage: http://www.ncbi.nlm.nih.gov/pubmed/12476639
Encyclopedia Britanica. (2013, February 18). Demography. Retrieved February 18, 2013,
from britannica.com: http://www.britannica.com/EBchecked/topic/157337/demography
fao.org. (2013, February 21). An introduction to the planning and evaluation of disease
control policy. Retrieved February 21, 2013, from fao.org:
http://www.fao.org/Wairdocs/ILRI/x5436E/x5436e06.htm#TopOfPage
Health Knowledge. (2011, February 23). Assessing the impact of political, economic, sociocultural, environmental and other external influences . Retrieved February 23, 2013, from
Assignment No...MF
http://www.healthknowledge.org.uk: http://www.healthknowledge.org.uk/public-healthtextbook/organisation-management/5b-understandingInvestopedia. (2013, February 26). Cash Flow To Capital Expenditures - CF to CAPEX' .
Retrieved February 26, 2013, from investopedia.com:
http://www.investopedia.com/terms/c/cashflow_capex.asp#axzz2M05fpykt
Jeroen De Flander. (2012, June 6). The 5 stages of politics in an organisation where are
you? Retrieved February 25, 2013, from Abudi Consulting Group L.L.C:
http://www.ginaabudi.com/the-5-stages-of-politics-in-an-organisation-where-are-you/
Krueger, N. F. (2002). ENTREPRENEURSHIP- CRITICAL PERSPECTIVE ON
BUSINESS AND MANAGEMENT.
Mark A. Lane, P. (2002 - 2013 ). Business Finance Online - Capital Budgeting. Retrieved
February 26, 2013 , from zenwealth.com/BusinessFinanceOnline:
http://www.zenwealth.com/BusinessFinanceOnline/CB/CapitalBudgeting.html
Merchant, P. (2013, February 24). 5 Sources of Power in Organizations. Retrieved February
24, 2013, from Chron: http://smallbusiness.chron.com/5-sources-power-organizations14467.html
Merchant, P. (2013, February 24). Sources of Power in Organizations. Retrieved February
24, 2013, from smallbusiness.chron.com: http://smallbusiness.chron.com/5-sources-powerorganizations-14467.html
Mind Tools. (2013, February 24). Conflict Resolution. Retrieved February 24, 2013, from
Mind Tools: http://www.mindtools.com/pages/article/newLDR_81.htm
NHS. (2013, February 26). Managing change and managing benefits . Retrieved February
26, 2013, from connectingforhealth.nhs.uk:
http://www.connectingforhealth.nhs.uk/systemsandservices/icd/benefits
Scot PHO. ( 2012 , September 21). The Scottish Public Health Observatory. Retrieved
September 21, 2012 , from scotpho.org.uk: http://www.scotpho.org.uk/lifecircumstances/social-environment/introduction
The National Academies Press. (2013 , February 23). The Impact of Social and Cultural
Environment on Health. Retrieved February 23, 2013, from nap.edu:
http://www.nap.edu/openbook.php?record_id=11693&page=25
WHO. (2013, February 18). World Health Organization. Retrieved February 18, 2013, from
http://www.who.int/topics/social_environment/en/:
http://www.who.int/topics/social_environment/en/
WIRRAL. (2013, February 26). Comprehensive Performance Assessment (CPA). Retrieved
February 26, 2013, from wirral.gov.uk/: http://www.wirral.gov.uk/my-services/council-anddemocracy/council-performance/comprehensive-p
Zwilling, M. (2012, March 12). 10 Ways to Build a Business Culture Like Apple. Retrieved
February 24, 2013, from forbes.com:
http://www.forbes.com/sites/martinzwilling/2012/03/03/10-ways-to-build-a-business-culturelike-apple