Project Appraisal and Pricing Strategies for Company Bravo

Learning Outcomes Covered by this assessment

Learning Outcomes Covered by this assessment.

1 Assess and evaluate the theoretical basis of financial strategic decision making

2 Analyse and interpret data, and by the integration of theory and practice, investigate and apply relevant tools to the assessment of a variety of business problems

3 Evaluate and synthesise the problem solving mechanisms from strategic financial decision making and assess the value to enhanced decision making of the application of relevant tools & techniques.

If the additional information does not indicate that it is project specific you are to assume that it is relevant to both potential projects;

·Extracts from the company financial statements are as follows:

·The company are wishing to reduce their carbon footprint in line with their core strategic values of sustainable production.  They have determined that renting the equipment for Project Gamma would reduce their carbon emissions by 70% but Project Alpha’s would have a nil effect on their carbon footprint.

·Project Alpha would require other projects to be put back by one year due to the initial capital investment required in Year 1.  It would not prevent these other projects from going ahead, but would delay their completion by one year – there is no quantitative financial data available for these other projects.

·Usual margin that the company achieves on its products is between 15-25% on a cost plus basis. ·The product that they are looking to introduce in both cases is a product that already has an established market with both well-established brand competitors and some substitutes.

·The market is reasonable mature having been in existence for about 5 years, there are no patents or other protection rights for the existing competitors but competition is fierce.

·This is a new product for Company Bravo and would be entry into a new market of which they have no experience or established reputation.  However, they do sell a complementary product for which they are the brand leader both on cost and perceived quality.

·They usually price on a cost plus basis but this is based upon the appropriateness of the method for the product being priced.

·PROJECT ALPHA ONLY- the plant and equipment has no scrap value

Requirements:

a) Calculate the CASH net present value of the two projects (including the taxation charge) The discount factor is 10% and you should round your answer to the nearest full pound (not pence).  Please provide your recommendation for which project based on the brief above and as part of NPV exercise you think is best suited to the strategic aims of Company Bravo.

Requirements of the assessment

b)Critically evaluate two other methods as project appraisal tools except NPV using academic references to support your answer.

Critically evaluate two pricing strategies using academic references to support your answer.

·You must submit assessments in Microsoft Word, Microsoft PowerPoint or PDF format.

·The file must be no larger than 40MB.

·Your writing is expected to conform to Standard English in terms of spelling, syntax and grammar.

·You must include your Assessment Number (J Number) in the header or footer.

·Include your word count at the end of the assignment or the front cover.

·Set up your page for A4 paper in portrait style.

·The font size must be a minimum of point 12 Calibri (or equivalent) for the body of the assessment and footnotes must be 2 points smaller.

·Line spacing in the body of the assessment must be 1.5 lines.

·Number the pages consecutively.

·Students should submit work before 12 noon on the deadline date electronically via Moodle. Please follow the ‘Turnitin submission’ link on the module space and follow the on-screen instructions, paying particular attention to any specific instructions for each assignment.

·You must submit your work with the following details written on the first page:

-Module title and code

-Module Leader and Seminar Tutor (if relevant)

-Number of words

-Your student assessment number (J Number)

Student work that does not have this information on will not be identifiable after marking has taken place and risks being recorded as a non-submission.

G: Academic Integrity and Penalties

It is your responsibility to ensure that you are familiar with all of the information contained in this brief as failure to do this may impact on your achievement.

Please refer to the various Assessment Guidance below for detailed information on:

·Academic Integrity

·APA Reference Guide

·Excess Word Count Penalties

·University Generic Marking Criteria

·Late Work Penalties

H: Marking Criteria

1 ·Calculation of the CASH net present value of the two projects (including the taxation charge) the discount factor is 10% and you should round your answer to the nearest full pound (not pence).

·Recommendation for which project based on the brief above and as part of NPV exercise you think is best suited to the strategic aims of the company

·Use of excel and demonstration of excel skills for the presentation of the financial elements

3 Critical evaluation and discussion of two other methods as project appraisal tools using academic references to support your answer.

4 Critical evaluation and discussion of two pricing strategies using academic references to support your answer.