Corporate Finance Assignment Brief Requirement:

Part (A) Answer all of the following questions.

Investment Decision

1. Bank Co had annual sales of €100,000 in 2019 and believes in 2020 they have an 80% chance of increasing this level of revenue by 25% due to their proposal to expand their store. However, there is a 20% chance they may not open the new part of the store due to fears of a declining market in which case revenue may drop by 10%. Calculate the expected value of the revenue in 2020.

2. In investment, appraisal discusses the main rules in relation to NPV Results.

3. Machine R costs €20,000 when purchased brand new and can be replaced every year, two years, three years or four years. The following information is available. Year Realisable value when sold (€) Maintenance costs for the year (€) 1 17,500 1,200 2 14,000 1,500 3 9,000 1,900 4 7,000 2,300 Cost of capital is 10%.

a) Calculate the is the optimal replacement policy?

b) Explain your understanding of replacement policy?

4. A company has the following pattern of cash flow for a project: Year Cash flow € 0 (70,000) 1 40,000 2 20,000 3 30,000 4 5,000 5 40,000 The company uses a discount rate of 10%.

a) Calculate the year discounted payback occurs.

b) What is the main reason to use discounted payback V’s non discounted payback?

Part (B) Financial Management Function

a) Corporate finance fundamentally relies on aligning the aims and objectives of corporate objectives and shareholder objectives. Critically discuss the role of management in meeting stakeholder objectives, including the use of agency theory.

b) Evaluate three financial objectives that are of key focus to the financial manager.

c). Evaluate what ‘agency problems’ may occur between shareholders and management.

d). Evaluate three ways to reduce agency theory conflicts.