CORPORATE FINANCE (BWFM5013)

SEM I-A221 (Group Assignment 2)

Case Study No 1- Marks 100 (10%)
Refer to case study entitled:
ANWAL GAS TRADERS: CAPITAL BUDGETING FOR EXPANSION
PROJECT
(Answer ALL the following questions)

CASE STUDY: ANWAL GAS TRADERS: CAPITAL BUDGETING FOR

EXPANSION PROJECT
LEARNING OBJECTIVES
After working through the case and assignment questions, students will be able
to do the following:
1. Understand the basic concepts of capital budgeting and decision-making.
2. Measure and apply capital budgeting techniques such as net present value
(NPV), internal rate of return
3. (IRR), and profitability index.
4. Perform a sensitivity analysis based on different scenarios.
5. Determine how changing internal and external factors affect capital
budgeting and decision-making.
6. Build a capital budgeting model in Microsoft Excel and develop an
integrated report.
7. Prepare forecasted profit and loss statements, forecasted balance sheets,
and forecasted cash flow statements.
Based on the case study provided, please answer the following questions:
1. What is the primary issue that Anwal Gas Traders are facing?

2. Inquire about the LPG Distribution Process-discuss it.

3. The consultant advises the government could increase the sector’s tax from 29
percent to 35 percent. The resulting price increase would only 3 percent
annually. How will this increase affect the company’s decision?

1
4. The finance department advises a local bank interest rate of 19 percent and a
weighted average cost of capital of 15 percent. Perform capital budgeting
techniques for the given scenario.

Rules and Regulations:

1. Each group should have the same members who work with them in the first
(writing) assignment.
2. Download the attached PDF to complete your answers.
3. 5% penalty for each day late
4. Due date: 07 December 2022 (Friday).
5. Format: times new roman, font-12, double-spacing.
6. 15 – 20 pages
7. Each group's writings can’t be matched with others. The allocated marks will
be deducted then if the similarity is found in the texts.
8. Turnitin Report must not exceed 20%: each group must submit its assignment
in UUM online learning.
9. Plagiarism would be checked by using Turn-it in service where the similarity
index must not exceed 20%.
RELEVANT READINGS
1. Lawrence J. Gitman and Chad J. Zutter, “Capital Budgeting Technique” and “Capital
Budgeting Cash
2. Flows,” chap. 10 and chap. 11 in Principles of Managerial Finance, 13th ed. (Boston,
MA: Pearson, 2012), 388–462.
3. John R. Graham et al., “Capital Budgeting Process and Decision Criteria” and “Cash
Flows and Capital
4. Budgeting” chap. 9 and chap. 10 in Introduction to Corporate Finance, Asia Pacific 2nd
ed. (Sydney, Australia: Cengage Learning, 2017), 308–397.
5. Eugene F. Brigham and Michael C. Ehrhardt, “The Basics of Capital Budgeting:
Evaluating Cash Flows,” and “Cash Flow Estimation and Risk Analysis,” chap. 10 and
chap. 11 in Financial
6. Management: Theory & Practice, 15th ed. (Boston, MA: Cengage Learning, 2016),
413–500