College of Administrative & Financial Sciences

Salmabad, Kingdom of Bahrain

_1st Tri _ _2nd Tri _x_ 3rd Tri, SY 2021-22

Instructions:
1 Conduct a research based on the topic given to you. Submit your narrative report at
least one week before your presentation.
2 Prepare your presentation once the narrative report is approved. NO APPROVED
NARRATIVE REPORT, NO PRESENTATION, ZERO GRADE IN THE FINAL PROJECT.
3 Presentation is 15 minutes per group. Mastery of the topic is important. No reading of
the slides. Make a smooth transition of your report.
4 You will report on the scheduled date and time. No changes will be allowed. No
presentation, ZERO GRADE for the FINAL PROJECT.
5 Complete this cover sheet and attach it to your activity output.
Students’ Declaration:
I declare that:
I understand what is meant by plagiarism (illegal copying of one’s work)
The implication of plagiarism is tantamount to cheating
This project/activity is all my own work and I have acknowledged any use of the published and unpublished
works of other people.
Total number of pages including this cover page

Program Course Section Due Date Date Submitted

Time/Days
BSIB BSBI525 10-12-2021
Course Title FINANCIAL MANAGEMENT
Students’ Full Name
& Signatures
Professor’s Name DR. Mary Benitta Jegan
FOR OFFICIAL USE ONLY
Marking Scheme Raw Scores Scores
Q1 10
Q2 7
Q3 3
Q4 5
Q5 5

Total Marks/ Marks Awarded 30

Course Coordinator Programme. Head, BSBI Associate Dean, CAFS

Dean, CAFS
 College of Administrative & Financial Sciences
Salmabad, Kingdom of Bahrain
_1st Tri _ _2nd Tri _x_ 3rd Tri, SY 2021-22

Date: : Date: : Date: : Date: :

FINAL PROJECT PRESENTATION

MARKING RUBRICS
10-9
 knowledge of issue is
exceptionally accurate
and is explained clearly
and effectively during
explanation using details
Analysis of the and little reliance on
Case notes
 exceptional critical
comments and analysis
of issue / interpretations
/ impact /  effect / using
details, insight, evidence
from comprehensive
thought
8-6 5-3 2-0
 issue is accurately  issue is explained  issue needs to use
explained and  uses with some accuracy more accurate
many details and but need more details information and
various sources in and more variety in details or
presentation with sources and less examples
some reliance on reliance on notes heavy reliance on
note  some critical notes during
 proficient critical comments given to presentation
comments and issue and effects  lack of critical or
analysis of issue  more details, insight analytical thought
/interpretations and and critical thought in comments and
impact using many needed little to no insight
details and evidence used
and some insight

Organization &   Report is exceptionally  Report is detailed,  Report  is somewhat  Report needs to
Writing detailed, organized, organized, logical organized and be more organized
logical and includes and includes images, includes some images and logical
images, clear and large clear and large font
font

10-9 8-6 5-3 2-0

Presentation of  exceptional delivery and  proficient delivery  -elivery and timing of  poor delivery and
Report timing of information and timing of information needs to timing of
(10 Marks)  exceptional discussion information be more smooth (too information
initiated and  proficient discussion much reading)  discussion needs
  maintained  to further started and  more active to be more
student learning maintained interaction and controlled and
discussion dynamic

COMMENTS:
 College of Administrative & Financial Sciences
Salmabad, Kingdom of Bahrain

IN-COURSE PROJECT

General Instructions:
1. Form a group with 4 members.
2. Conduct a Research on:

Case study
Learning Objectives
The purpose of this case is to help you:
 Students will possess knowledge of current theory and techniques of the major business
discipline.
 Students will exhibit the leadership capacity and teamwork skills for business decision
making.
 Students will understand the ethical implication of business decision making and
recognize ethical dilemmas.
 Students will demonstrate the ability to communicate effectively.
 Students will demonstrate critical thinking skills.

Part I

Frank Wright runs a small bakery. He is concerned with the liquidity position of his firm as he
has heard that liquidity problems are one of the most frequent explanations for business failure.
The following data is available:

Particulars Amount
Inventory 1,50,000
Cash 50,000
Sundry Debtors 300,000
Creditors 350,000
Bills Receivable 30000
Bank Overdraft 30000

Prepared by : Reviewed / Checked: Verified by: Approved by:

Course Coordinator Dept. Head, BSIB DR. VINODH NATARAJAN DR. MARLUNA URUBIO
Associate Dean, CAFS Dean, CAFS
Date: : Date: : Date: : Date: :
 College of Administrative & Financial Sciences
Salmabad, Kingdom of Bahrain
Required

Q1. Calculate the current ratio and liquidity (acid test) ratio based on the above data.(8 marks) 4
marks on each ratio calculation
Q2. Give a brief evaluation of the liquidity position of Frank Wright's bakery(2marks)

Part II

DT consultancy is considering an investment of $100,000. The useful life of the project is 10

years. The cutoff period is three (3) years. The board of directors has identified two alternatives
A and B. The expected annual cash flows are as follows:
Cost or Cash Flow Alternative A Alternative B
Initial cost ($100,000) ($100,000)
Cash flow year 1 35,000 35,000
Cash flow year 2 28,000 35,000
Cash flow year 3 32,000 35,000
Cash flow year 4 40,000 35,000

Q2. Suggest DT Consultancy which project is feasible to choose?(7 marks)

Q3. Mentions any three valid reasons for choosing the particular project (3 Marks)

Part III
Finance is the supply of funds, which regulates the activities and operations of the industry.
Adequate finance is required besides the requirement of fixed and working capital for
undertaking the program of extension, reorganization or expansion. Finance regulates the
activities and operations of the industry. Adequate finance is required besides the requirement
of fixed and working capital for undertaking the program of extension, reorganization or
expansion. There are various source of raising funds. Since, now-a-days market is open, so both
domestic and international market are available for procuring the funds. Finance is being raised
through issue of shares, debenture, bond and retained earnings (internal source) from domestic
as well as international capital market in the form of Global Deposit Receipts, American
Prepared by : Reviewed / Checked: Verified by: Approved by:

Course Coordinator Dept. Head, BSIB DR. VINODH NATARAJAN DR. MARLUNA URUBIO
Associate Dean, CAFS Dean, CAFS
Date: : Date: : Date: : Date: :
 College of Administrative & Financial Sciences
Salmabad, Kingdom of Bahrain
Deposit Receipts and Foreign Currency Convertible Bonds and from the wide range of financial
institutions. However, the finance is not free of cost. The charge on each source capital is
known as cost of capital. The cost of capital of any investment is the rate of return the suppliers
of capital would expect to receive if the capital were invested elsewhere in an investment of
comparable risk.

Q4. Why is important for firms to consider the cost of capital when making decisions to invest
in long term projects?(5 marks)

Q5. Explain what sources of funds should be considered in computing the weighted average
cost of capital.(5 marks)

 Write proper citation and referencing in your report.

 Write your report in A4 paper
 Side left margin is 1.25 and the right side margin is 1.0
 Upload your narrative report to the Moodle.
 Present your research output within 10-15 minutes.
 Your Final Project marks will be based on the given rubrics.
 The group has to write their own project.
 Maximum similarity index is 20% (Plagiarism Report)
COPIED PROJECT will be mark ZERO for all the groups.

Prepared by : Reviewed / Checked: Verified by: Approved by:

Course Coordinator Dept. Head, BSIB DR. VINODH NATARAJAN DR. MARLUNA URUBIO
Associate Dean, CAFS Dean, CAFS
Date: : Date: : Date: : Date: :
 College of Administrative & Financial Sciences
Salmabad, Kingdom of Bahrain

Answers:

Part1 :

Payback period for alternative A:

Since the cutoff period is three years, the company will recover ($35000 + 28000 + 32000)
in three years i.e. $95000

The remining amount ($100000 - 95000) will be recovered from cash flow of fourth year i.e.
5000/40000 = .125 years

Hence, the payback period is 3.125 years.

Payback period for alternative B:

As the cash flows are same year on year, the payback period will be $100000/$35000 =
2.857 years

Hence, the payback period is 2.857 years.

Prepared by : Reviewed / Checked: Verified by: Approved by:

Course Coordinator Dept. Head, BSIB DR. VINODH NATARAJAN DR. MARLUNA URUBIO
Associate Dean, CAFS Dean, CAFS
Date: : Date: : Date: : Date: :
 College of Administrative & Financial Sciences
Salmabad, Kingdom of Bahrain

Part2:

Below is the table showing calculation of Payback Period for Alternative A :

Year Cash Flows Cumulative Cash Flows

1 35000 35000

2 28000 63000

3 32000 95000

4 40000 135000

Payback Period = Complete Years + Remaining Cash flow / Cashflow for the year to
be recovered
= 3 years + (100000 - 95000) / 40000
= 3.125 years
Payback Period of Alternative B = Initial Investment / Annual Cash Flows
= 100000 / 35000
= 2.86 years

2.) Alternative B should be chosen. The project has a three-year deadline, and under
Alternative B, the cash flow will be recovered within three years.

Prepared by : Reviewed / Checked: Verified by: Approved by:

Course Coordinator Dept. Head, BSIB DR. VINODH NATARAJAN DR. MARLUNA URUBIO
Associate Dean, CAFS Dean, CAFS
Date: : Date: : Date: : Date: :
 College of Administrative & Financial Sciences
Salmabad, Kingdom of Bahrain

3.) The payback period is the amount of time it takes to recoup the initial investment
through project cash flows. It is also known as the break even phase.
Payback Period Restrictions:

(a.) It has the constraint of disregarding the time worth of money, which is the
most significant drawback.
(b.) It does not take into account cash flows received beyond the payback
period.
(c.) A project with a short payback time will be chosen. However, this is not
always the case. In certain instances, project cashflows cease upon
repayment or are decreased, indicating that the project was not a worthwhile
investment. As a result, it may sometimes lead to poor decision making..

Part3

What Exactly Is WACC?

As far as speculation, WACC is the normal rate that organizations pay to finance their whole
tasks. WACC is controlled by joining value speculations from stock deals just as any functional
obligation caused (corresponding to the company's venture esteem).
WACC ascertains how much a business needs acquire on its present resources to fulfill the
interests of the two its financial backers and its banks. Understanding this measurement might

Prepared by : Reviewed / Checked: Verified by: Approved by:

Course Coordinator Dept. Head, BSIB DR. VINODH NATARAJAN DR. MARLUNA URUBIO
Associate Dean, CAFS Dean, CAFS
Date: : Date: : Date: : Date: :
 College of Administrative & Financial Sciences
Salmabad, Kingdom of Bahrain
assist you with assessing assuming an organization's stock has space to grow or regardless of
whether its headway is limited by how the firm is financed.
WACC is regularly truncated as the "cost of capital" and is here and there alluded to as "right
side funds." The joined subsidizing sources that a business uses are constantly recorded on
the right half of the spending plan page in records (counting financing and obligation).
Subsequently, the principle factors needed to figure WACC are on the asset report's right side.

Part3 :
Selecting an Investment In working net present worth, the cost of capital is utilized as a
markdown factor. It helps associations and monetary patrons in assessing all hypothesis
possibilities. It does this by changing over future earnings into present worth while keeping
them restricted. Basically, the veritable speed of return on an endeavor is diverged from the
organization's cost of capital. In like manner, the cost of capital plays a huge effect in
hypothesis choices. Capital Structure Design Capital development insinuates the extent of
commitment to esteem. An ideal capital plan is the rate that may reduce the cost of capital
while extending the organization's worth. It may in like manner help with huge business
spending plan decisions that consolidate the use of association financial resources as capital.
The cost of capital aides in the arrangement of the capital development by thinking about the
cost of every wellspring of financing, monetary supporter suspicions, the impact of expense
assortment, and the potential for advancement. It is useful in capital arranging choices about
the association's wellsprings of financing. Execution Evaluation The cost of capital is used to
survey the introduction of a couple of divisions. It may be used to assess the headway of
ceaseless drives and adventures by differentiating their progression against the cost of capital.
The workplace is seen as awesome to the extent giving the business the best certain net
present worth. It assists with the appraisal of adventure choices by changing future salaries of
theory courses into current worth through restricting. The assignments of a couple of
workplaces are widened or reduced ward on their show. Making a Dividend Policy Dividends
Prepared by : Reviewed / Checked: Verified by: Approved by:

Course Coordinator Dept. Head, BSIB DR. VINODH NATARAJAN DR. MARLUNA URUBIO
Associate Dean, CAFS Dean, CAFS
Date: : Date: : Date: : Date: :
 College of Administrative & Financial Sciences
Salmabad, Kingdom of Bahrain
are given to financial backers as a level of the organization's overall benefit. The chance of
capital may be accommodatingly used as a gadget in making other fundamental financial
choices. Regardless, on the off chance that the association gets the chance to participate in
such drives that offer a more conspicuous speed of return rather than the cost of capital, it may
keep every one of the advantages in the business. Decisions on benefit system, benefit
capitalization, and working capital sources may be made on this reason. Accepting the
association doesn't have the decision of contributing the benefit, all of them may be given as
benefits. Consequently, the benefit procedure is energetically affected by the cost of capital.

Prepared by : Reviewed / Checked: Verified by: Approved by:

Course Coordinator Dept. Head, BSIB DR. VINODH NATARAJAN DR. MARLUNA URUBIO
Associate Dean, CAFS Dean, CAFS
Date: : Date: : Date: : Date: :