5BUS1158 Financial Management Assessment Brief SemB 2026 | U

5BUS1158 Assessment Brief

5BUS1158 Assessment Criteria

Learning Outcomes: Knowledge and Understanding tested in this assignment:

1. Identify the sources of finance to a company and the rewards of the providers of that finance.
2. Discuss the sources and evaluation of risk;
3. Analyse the role of mergers and acquisitions in achieving the objectives of a company; Learning Outcomes: Skills and Attributes tested in this assignment:
4. Identify and apply appropriate techniques for choosing between alternative sources of funding;
5. Identify and apply appropriate methods for making long and short-term asset allocation decisions;
6. Apply different methods of incorporating risk into financial decision-making models;

Feedback /Marking criteria for this Assignment

Performance will be assessed using HBS Grading Criteria and the Mark scheme.
Guidance for improvement will be given in writing on the Assessment Feedback Form or on the Study Net
Feedback Form within 4 weeks of submission.
For each day or part day up to five days after the published deadline, coursework relating to modules submitted late will have the numeric grade reduced by 10 grade points until or unless the numeric grade reaches 40 for levels 4, 5 and 6 or 50 for level 7 (PG). If a submission is more than 5 working days after the published deadline, a grade of zero will be awarded.
Where the numeric grade awarded for the assessment is less than 40 for levels 4, 5 and 6, or 50 for level 7, no lateness penalty will be applied

Detailed Brief for Individual/Group Assessment

Assignment Title: Investment Appraisal Analysis & Havin plc.

Description of the assignment:

In this assignment, students are expected to analyse a potential investment scenario, appraise the optionsavailable and recommend whether the company should go ahead with the project and why. The assignment also encompasses an evaluation of how to finance the investment and an evaluation of the role of an acquisition in achieving the objectives of a company.

This assignment is an individual report.

Havin plc.

In 2015, Danny and Doris Havin, enthusiastic surfers, started a small surfboard production business in the South West of England. The business expanded as surfing became more popular and demand for their hand-crafted surfboards increased. From their small beginnings grew the now publicly quoted company of Havin plc.

In recent years, the directors have decided that the business has reached the limit of development in its present form. The directors believe that the long-term success of the company lies in future improvement and expansion. Future development requires large-scale expansion to compete with the cost base of mass-produced surfboards.

They have investigated a number of possibilities, deciding eventually to expand their production facilities and their distribution system so that their newly branded products could be sold by independent, quality retailers around Great Britain. They consider that the most beneficial action they could take is to investigate an acquisition (takeover) of a company in the UK. After having serious and lengthy discussions in the Executive Board Committee, they made a decision on the acquisition of a company.

The project involves the acquisition of a company that has a larger production and distribution facility in the local area. The cost of the acquisition is £15,000,000 and needs to be paid immediately. If Havin plc decided to proceed with this project, this would involve transferring some of the current production to this new facility and selling the rest of the current production immediately. In regard to this sale process, they have been offered an estimate of £7,750,000.

Furthermore, new machinery and equipment would need to be purchased at a cost of £9,500,000 before production could begin. This machinery and equipment would be sold at the end of the ten years for an estimated scrap value of £2,500,000.

In order to assess the building and investment costs of the project, professional fees of £50,000 will be incurred at the start of the project and payable immediately. They have carried out market research in the area for £45,000.

The directors want to evaluate the acquisition over more than 10 years.

The directors expect an increase in share price after the acquisition and estimate that the acquisition may add value to Havin plc. The project would be expected to achieve a maximum payback period of 5 years. The company’s cost of capital is 10%.

Operating Costs and Revenues Relating to the Project

(£000)

Havin plc.’s equity and borrowing are currently made up as follows:

In order to raise the funds required for investment in the expansion, the board of directors will consider both increasing borrowing and issuing new shares. However, the level of gearing must not exceed 40%.

Required:

You have been asked to write a report for the directors, which will:

a) Evaluate the viability of the project by using appropriate investment appraisal techniques.

b) Evaluate the alternative sources of funding (debt & equity) by incorporating risk and reward into financial decisions. (Evaluation of how to finance the investment).

c) Evaluate the role of the acquisition in achieving the objectives of the company (Evaluation of the potential value enhancement to the company by applying related theory)