MN7029NI_Financial Decision Making S25 (1st Sit) 002 CWK QP

COURSEWORK: QUESTION PAPER (1st- Sit)

Spring 2025 Semester Long

Module Code:	MN7029NI
Module Title:	Financial Decision Making
Module Leader:	Mr. Prakash Ghimire (Islington College)

Coursework Type:	Coursework Investment Appraisal
Coursework Weight:	This coursework accounts for 70% of your total module grades.
Submission Date:	16 May 2025
When Coursework is given out:	10 March 2025
Submission Instructions:	You are required to submit your assessment via MST Platform as a PowerPoint file (.pptx). Use the PowerPoint notes to support and explain the side content along with the plagiarism test report. You should also record the video presentation. This should be uploaded to YouTube with a setting of public, unlisted and provide a link on the cover slide to the video recording.
Warning:	London Metropolitan University and Islington College take Plagiarism seriously. Offenders will be dealt with sternly.

Individual coursework:

Section A: Learning outcomes of the assessment:

Following learning outcomes are assessed by this assessment

LO 2. Demonstrate an understanding and use of the appropriate analytical techniques to be applied to business case development and investment appraisal; the raising of finance and distribution of funds to investors.;

LO 3. Demonstrate an understanding of basic statistics and modelling techniques and be able to interpret and communicate findings.

Section B: Introduction

Based on a case-study, students will prepare an investment appraisal of a business project or major sale. They will submit a presentation and support spreadsheet analysis.

This summative assessment is an individual coursework and accounts for 70% of your total module grades. You must include a reference list identifying all your sources and use citations, both using the Harvard Referencing system.

The University takes academic misconduct very seriously and always seeks to rigorously protect its academic standards. Plagiarism, collusion, and other forms of cheating constitute academic misconduct, for which there is an explicit range of graduated penalties depending on the particular type of academic misconduct. We can use Google Classroom to check the plagiarism status of students when they submit their assessments.

Section C: Assessment Detail

You are the Business Manager for Summit Trails Co., a luxury travel company specialising in guided mountain expeditions and personalised adventure travel in the Himalayas. The company has been conducting Research and Development (R&D) on a new luxury travel package aimed at high-net-worth individuals, combining exclusive helicopter tours, premium accommodation, and personalised services. Now, the company needs to decide whether to launch this exclusive package and determine the appropriate pricing for the product.

As the Business Manager, you are responsible for preparing a detailed report on the potential investment in launching the new travel package. Unfortunately, the Finance Manager is unavailable for the next one month, so you will be presenting the findings to the CEO and the Board on your own.

You’ve been given the following information by different departments within the organisation:

R&D Team:
“We have already invested a significant amount of £200,000 in developing the concept for this package, including partnerships with hotels and helicopter services. We estimate that an additional £50,000 will be required to finalise contracts and prepare for the launch.”

Operations Department:
“To support the scale of this new package, we’ll need to acquire a luxury helicopter for £5 million and invest £1 million in immediate working capital for operations. We have enough capacity with our current ground staff, but we will need to hire a helicopter pilot with an estimated salary of £100,000 per year. The helicopter will have a service life of 7 years and a residual value of £200,000.”

Marketing Department:
“We have conducted market research and believe that we can charge £25,000 per client for the first year, with adjustments for market demand thereafter. Our pricing projections for the next five years are:

Year 1: £25,000
Year 2: £23,500
Year 3: £22,000
Year 4: £20,500
Year 5: £19,000

The variable cost per client (including accommodation, food, transportation) is estimated to be £12,000. Fixed costs, including the helicopter’s maintenance and depreciation, are projected to be £1 million annually. Marketing costs will be £500,000 annually.

Projected client numbers for the first five years are as follows:

Year 1: 200 clients
Year 2: 300 clients
Year 3: 400 clients
Year 4: 350 clients
Year 5: 250 clients

Beyond five years, we expect the luxury adventure market to evolve, so we anticipate the package will only have a five-year life.”

HR Department:
“The pilot’s salary will increase by 2% annually due to inflation and other benefits.”

Financial Information:

The market value of the company’s shares is £3 per share, with 3 million ordinary shares in issue. Dividends are currently 20p per share and are expected to remain constant.
The company has £4 million in irredeemable loan capital with an interest rate of 10%, quoted at £90 per £100. The corporate tax rate is 25%.
Historically, the company has used a Weighted Average Cost of Capital (WACC) of 18%, but the management team is interested in calculating the current WACC for the company.

Your Task:
The CEO has requested that you prepare a presentation for the Board outlining the financial viability of launching this new travel package. The Board consists of non-financial professionals, so your presentation must be comprehensive and include explanations of the financial techniques used. Specifically, the Board would like the following:

a. Executive Summary
(Include a short-recorded presentation of no more than 5 minutes summarising the key points and conclusions)

b. Projected cash flow for the travel package over its five-year life.

c. Explanation of WACC:

What is WACC?
Why do we use WACC?
Your calculation of the company’s current WACC and an explanation of the individual components.

d. Financial evaluation of the project using NPV and Payback Period:

Calculate NPV and Payback Period using the calculated WACC.
Calculate NPV and Payback Period using the company’s historical WACC of 18%.
Based on these calculations, provide a recommendation on whether to proceed with the project.

e. Conduct the financial SWOT analysis of public listed company. Assess it’s financial strengths, weaknesses, opportunities, and threats using its latest financial statements and market performance. Provide the well supported analysis with relevant financial data and insights.

g. Conclusion:

Provide a final recommendation on whether the company should move forward with the new travel package, considering both the calculated WACC and the historical WACC.

Prepare a report with an executive summary, detailed financial calculations, and your final recommendation for the project’s viability based on different capital cost assumptions.

Structure of the report

The report should be prepared in PowerPoint and should contain the following slides:

Coverage Page
Executive summary (A summary of your proposal in a page)
Company Introduction
Calculation and critical evaluation of WACC (detailed calculation may be shown in an Appendix)
Projected cash flow
Calculation of NPV and PP (detailed calculation may be shown in an Appendix) using the WACC
Calculation of NPV and PP (detailed calculation may be shown in an Appendix) using a cost of capital of 18%
Financial SWOT analysis of public company and provide the relevant financials data and insights.
Conclusion
Appendices – detailed calculations and references

The PowerPoint file should be uploaded to MST. A template is provided but you should feel free to adapt and personalise this.

Section D: Assessment Marking Scheme

The assessment is marked out of 100. The following shows the mark allocation and the approach required for each section.

Marking guide

Marking Criteria	Marks
Calculation and explanation of WACC for the company	15
Calculation and explanation projected cash flow for the project	15
Calculation and Explanation of NPV and Payback Period using the WACC you have calculated	15
Calculation and Explanation of NPV and Payback Period using a 18% cost of capital	15
A decision as to whether the project should go ahead and your justification for this decision	5
Financial SWOT analysis of public company and provide the relevant financials data and insights	25
Your report and presentation: executive summary, professionalism, summary recording, logical flow and conclusion	10
Total	100

Section E: Assessment Grade Description

Mark	Achievement level
Distinction	85-100%	Outstanding work showing extensive knowledge and understanding of an extensive range of relevant international business management trends, scenarios, issues, concepts, theories and data. Exceptional ability to analyse, synthesise, and evaluate. Solutions and recommendations demonstrate strong ethical appreciation and deep understanding of the need for corporate responsibility. Evidence of extensive reading, study and sense making beyond the course content, and of independent thought. Writing that is fluent, clear, concise and grammatically correct. Tables, diagrams and other figures are highly effective in supporting the text and presenting key messages. Numeric analysis that is complete and free from errors with application of methods that may be insightful or original A submission that is focused and relevant to the task, comprehensive, accurate, and presented in a very professional manner. Excellent use of digital technology. Demonstrates strong ability to pursue research at Doctoral Level. Comprehensive, error free citations and reference list.
Distinction	70-84%	Excellent work showing extensive knowledge and understanding of a considerable variety of international business management trends, scenarios, issues, concepts, theories and data. Good analysis, synthesis, and evaluation. Solutions and recommendations demonstrate ethical appreciation and awareness of the need for corporate responsibility. Evidence of substantial reading, study and sense making beyond the course content and of independent thought. Writing is fluent, clear, concise and grammatical. Strong use of tables, diagrams and other figures in supporting the text and presenting key messages. Numeric analysis that is complete and mostly free from errors with appropriate application of methods. A submission that is relevant to the task, comprehensive, accurate, and presented in a well-structured and organised manner. Good use of digital technology. Demonstrates the ability to pursue research at Doctoral Level. Comprehensive citations, and correct use of the Harvard style in the reference list.
Merit	60-69%	Good work showing wide knowledge and understanding of an extensive range of relevant business trends, scenarios, issues, concepts, and theories. Some analysis, synthesis, and evaluation. Ethics and corporate responsibility questions are considered. Questions of ethics and corporate responsibility are addressed appropriately. Reference made to relevant course material with evidence of some reading, study and sense making beyond the course content and some independent thought. Writing is clear, mostly concise, and has few grammatical errors. Good use of tables, diagrams and other figures in supporting the text and presenting key messages. Numeric analysis that is complete and mostly free from errors with relevant and effective application of methods. A submission that is relevant to the task though less than completely comprehensive, is mostly accurate, and is well presented. Mostly good use of digital technology. Effective use of citations and a complete reference list. Some minor errors in use of the Harvard style
Pass	50-59%	Adequate work showing reasonable knowledge and understanding of relevant business issues, concepts, and theories. Limited analysis, synthesis, and evaluation. There is some clear but limited consideration of ethics and corporate responsibility. Little or no evidence of reading, study and sense making beyond the course content and little or no independent thought. Writing is less than clear, is not concise and has some grammatical errors. Some use of tables, diagrams and other figures in supporting the text and presenting key messages. Numeric analysis that is mostly complete and free from significant or critical errors with appropriate application of methods A submission that is mostly relevant to the task and reasonably accurate, but not very comprehensive and with some errors and shortcomings of presentation, structure and organisation. Basic use of digital technology in the creation and presentation of the work. Adequate citation and reference list. Some errors in use of the Harvard style and some missing citations.
Fail	40-49%	A weak piece of work showing only limited knowledge and understanding of course content with substantial errors or omissions. Mainly descriptive with little or no analysis, synthesis and evaluation, and no independent thought. Ethical and corporate responsibility issues are not considered. Evidence of a range of sources but with reliance on inappropriate sources without critical evaluation. Writing is not clear and has frequent grammatical errors. Numeric analysis that is mostly complete but contains errors with significant effect, or methods that are applied inappropriately Much of the submission is not relevant to the task. Lacking professionalism, weak presentation, poorly structured and organised. Ineffective use of digital technology in the creation of the work. Limited citation and reference list.
	30-39%	A poor piece of work with extensive errors and omissions, badly written and ungrammatical. A little relevant material but poorly presented with little evidence of understanding. Weak use of digital technology.
	0-29%	A very poor piece of work lacking in understanding and with serious errors and omissions but with evidence of some knowledge vaguely relevant to the question.