BTEC : EBM

Unit No. and Title Assignment no. Assignment Title Assignment Due date Managing finance 02 Cost of finance Pls refer to assignment Schedule

Assignment Brief This assignment will assess your understanding of costs associated with the different sources of finance. The practicability of the concepts and implication with regards to businesses around us. Assignment Task/ Description The student will need to answer TASK A and TASK B mentioned below: Task A: Scenario: ABC Training with an annual turnover 25 million, is contemplating relocating to new premises. Two possible sites are available with slightly different features and aspects. The re-location will help them to be able to meet clients' needs more effectively. Location A: Investment required for the move = 10 million The location is in the heart of the city centre and an estimated increase of 25% is expected if this option is chosen. Location B: Investment required for the move = 8 million Very close to city centre and business will increase by 10% if this option is selected. ACB Training is a private limited company formed ten years ago by a group of five exlecturers. The five are the main shareholders but there is also a shareholder who was a local businessperson who initially approached two of the five to run a training course for

her company. They have the following options to generate the finance; a) The management is thinking of generating the required finance by issuing 1 million new shares of 10 each. b) One of the banks with which ACB training has a long lasting financing relationship has sent a quote to provide loan for the money needed. The interest rate is 7% per annum and the maximum loan period can be 10 years. c) The retained earnings account showed a balance of 25 million in the last years balance sheet. d) One of the competitor companies have offered to help ACB Training with this project, the investors are expecting 80% share of profit in the future ventures. In scenario, evaluate the costs of sources of finance available to ACB Training to carry out the projects outlined. Also mention how the option selected will reflect on companys financial statements. Task B: Write an essay on the importance of financial planning and how needs of decisions makers can be met with?

Assessment Criteria

PASS

The student will be awarded a pass grade if he shows understanding of the concepts and importance of the following. Compare the costs of different sources of finance Explain the importance of financial planning Describe the information needs of different decision makers Describe the impact of finance on the financial statements The student will be able to achieve a merit if along with achieving the Pass criteria he has: Conducted a research with the help of different sources e.g. internet and compared the costs of finance for any 2 real businesses. A student will be awarded a distinction if he along with the Pass and Merit Criteria, Draws conclusion on the comparison for the selected businesses financial decisions has been made .

MERIT

DISTINCTION

Learning Outcomes achieved in the assignment: The LO achieved in the assignment have to be stated at the end of the assignment and the assignment should clearly show evidence that they have been achieved: Compare the costs of different sources of finance 2. Analyse the implications of finance as a resource within a business

explain the importance of financial planning describe the information needs of different decision makers describe the impact of finance on the financial statements