Appraising the Financial Viability of a New Project :
2022/23 ASSIGNMENT DOCUMENT UPLOAD
ASSIGNMENT TASK:
Media Marketing is a Birmingham based marketing agency that provides marketing services and shared workspaces for small enterprise start-ups. The design of the office space allows for: individual and shared offices; hot-desking; meeting rooms and event functions. Media Marketing is also fully equipped with the latest technological equipment.
Throughout the building there are a selection of coffee lounges and casual diners where customers can network with other like-minded entrepreneurs.
However, despite the promising interest and demand from the local entrepreneurial community, Media Marketing are reporting comparatively disappointing figures. For example: Media Marketing have stated that their attendance for the last financial year was 40,000 customers – a reduction of over 20% from previous years.
The owners of Media Marketing attribute this decline to the Corona Virus and the lockdown/restrictions imposed in Birmingham. The owners are, therefore, apprehensive about the future – particularly if further restrictions are imposed.
That said, due to the ‘lockdown’ and the impact this had on traditional working environments, the owners of Media Marketing are equally encouraged by the change in working culture. In particular,they are aware of a significant shift towards a demand for more flexible work environments.
For example: https://www.bbc.com/worklife/article/20210915-how-companies-around-the-world-are-shifting-the-way-they-work
Research undertaken by UCB Business Students, on behalf of Media Marketing, identified a number of issues that would influence potential customers in their decision to utilise a shared workspace environment. The research highlighted that:
- ‘Hygiene’ was a significant factor: this specifically related to the precautions the business had taken to reduce transmission of the virus.
- ‘Location’ was a significant factor: this specifically related to avoiding traffic and ease of parking.
Media Marketing are keen to explore these opportunities further. They are considering the financial viability of investing in either:
- An air filtering system in their main commercial estate which is located in the city centre.
- Converting an empty retail outlet, on the outskirts of Birmingham, into a new shared workspace.
Media Marketing anticipate the cost of capital will be 8% and have projected the cash-flow and profits below:
| Project A – Air Filtering System Investment: £360 000 | Project B – Converting Retail Outlet Investment: £150 000 | |||
| Year | Cash flow | Profit | Cash flow | Profit |
| 1 | 68000 | 65000 | 28000 | 25000 |
| 2 | 88000 | 68000 | 30000 | 28000 |
| 3 | 87000 | 70000 | 45000 | 43000 |
| 4 | 66000 | 80000 | 52000 | 48000 |
| 5 | 95000 | 75000 | 64000 | 54000 |
TASK GUIDANCE:
Media Marketing have requested that you complete the following:
- Calculate the Payback Period for each project and provide a summary of your key findings (approx.100 words)
- Calculate the Accounting Rate of Return for each project and provide a summary of your key findings (approx. 100 words)
- Calculate the Net Present Value for each project and provide a summary of your key findings (approx. 100 words)
- Evaluate your results from the three methods and appraise the viability of each project. Provide commentary on which project you would recommend to Media Marketing and give clear justifications to support this decision (approx. 600 words).
- Media Marketing are open to exploring other potential capital investment projects. Using reliable sources to support your arguments, provide two alternative projects you would recommend Media Marketing could investigate (approx. 600 words).
MARKING CRITERIA:
- Statements and calculations can be prepared in either Word or Excel.
- The assignment must be submitted as one complete document.
- You must demonstrate a concerted effort to attempt each task.
- Work must be proof-read and presented in a professional manner
- Allocation of Marks:
- Task 1: 10 marks
- Task 2: 10 marks
- Task 3: 20 marks
- Task 4: 30 marks
- Task 5: 30 marks
E-SUBMISSION GUIDANCE FOR DOCUMENT UPLOAD SUBMISSION:
- This Appraise the Financial Viability of a New Project assignment will require you to submit your work by uploading a document in Word or PDF format to Canvas. Please follow this online guide on document submissions and contact the DICE team on [email protected] if you need any further support.
GENERAL ASSIGNMENT GUIDANCE:
| Teamwork and Its Assessment | Should this assignment require you to work as part of a team, you will receive an individual grade based upon your performance as well as personalised feedback. The module leader will explain how your individual grade and feedback will be determined. |
| Importance of Word Count and Presentation Timings | Assignment word counts and presentation timings should always be observed. Ignoring a word count increases significantly the risk of your work losing marks because it lacked structure, flow, focus and clarity. Timings must be observed for assessed presentations for the same reasons. |
| E-submission | https://www.ucb.ac.uk/higher-education-student-handbook/assessment-issues/ |
| Cut-off date for late work | https://www.ucb.ac.uk/higher-education-student-handbook/assessment-issues/ |
| Grading criteria | https://www.ucb.ac.uk/higher-education-student-handbook/assessment-fairness-and-marking/ |
| Plagiarism | https://www.ucb.ac.uk/higher-education-student-handbook/essay-writing/plagiarism/ |
| Extenuating Circumstances | https://www.ucb.ac.uk/higher-education-student-handbook/assessments-if-things-go-wrong/ |
| UCB Referencing Guide | https://portal.ucb.ac.uk/download/referencing/referencing-guide.pdf |
| General Academic Guidance | https://ucbirmingham.instructure.com/courses/26756 |
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