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You are a banker to Livingstone Thompson Limited, a textile manufacturing company. Livingstone Thompson Ltd. is planning to establish a new factory overseas.

APC312 Money, Banking and Finance

 

Outcomes Assessed: All module learning outcomes, knowledge and skills, are assessed in this assignment.

This assessment is in four (4) parts. Please answer all elements

As the weightings for the tasks are not identical, you are advised to consider this in word allocation.

  • Part A carries a weighting of 15%. Students should write 50 words (+ or - 10%).

(NOTE calculations can go in appendix and do not count towards word count).

  • Part B carries a weighting of 20% and students should write 700 words (+ or - 10%)
  • Part C carries a weighting of 35% and students should write 1,220 words (+ or - 10%).
  • Part D carries a weighting of 30% and students should write 1,030 words (+ or - 10%).

Assessment weight: 100% of the module Word Count – 3,000 words (plus or minus 10%)

APC312 Money, Banking and Finance

Notes:

To obtain a high mark, you should:

a) Putting calculations into your appendix will not count towards your word count.

b) Incorporate your knowledge and understanding of money, banking and finance issues into your answer.

c) Demonstrate critical understanding of banking and finance issues.

d) Show evidence of key text and background reading.

e) Synthesise information in a coherent and useful way

A Harvard standard referencing is required for this assignment.

Please note that this is an individual assignment and the policy of the University on “Policy on Cheating, Collusion and Plagiarism” applies.

Part A APC312 Money, Banking and Finance

You are a banker to Livingstone Thompson Limited, a textile manufacturing company. Livingstone Thompson Ltd. is planning to establish a new factory overseas. The project requires an initial investment of £15 million. Livingstone Thompson Ltd. have told you that the factory will run for six years and then be sold to a local entity. The Finance Department of Livingstone Thompson Ltd. has estimated the following yearly cash flows:

Year

Cash Flow (£)

0

-30,000,000

1

8,000,000

2

8,000,000

3

8,000,000

4

8,000,000

5

8,000,000

6

14,000,000

The Financial Manager of Livingstone Thompson Ltd. has decided that the company’s cost of capital of 15% is an appropriate hurdle rate for this project and informed you who will be providing the finance.

i. Calculate the Net Present Value (NPV) for this project. (5 marks)

ii. Calculate the Internal Rate of Return (IRR)of this project. (5 marks)

iii. Make a recommendation to your department manager concerning whether to provide finance for this project. (5 marks)

Part B

A special case of the Internal Rate of Return (IRR) is the Yield to Maturity (YTM). Explain how the YTM is used to calculate the yield curve and why investors track moves in the yield curve. (20 marks)

Part C

‘Financial intermediaries are vital to a well-functioning financial system’. Critically analyse this statement. (35 marks)

Part D

The transmission mechanism of monetary policy is how central banks attempt to control the price level and affect the economy by influencing short-term interest rates. Discuss the factors that determine the time-lag between the application of instrument or tool of monetary policy and the achievement of the ultimate goal. (30 marks)

Guidance:

Students are encouraged to be inquisitive and innovative in their approach as to what should be included in this report the following may be of some use in providing guidance as to what could possibly be included, although this is in no way meant to be prescriptive.

As part of your work, you should explore the underlying theory behind the key areas of investigation that you identify and appropriately referenced comments and quotes to sources to demonstrate wider reading. Additionally, the inclusion of some practical/real world examples to act as support/explanation for your evaluative comments is encouraged.

Numerical example for illustrative purposes may be of use but should not be the only element of the work; discussion and interpretation of models and concepts is also required.

With a word limit of about 3,000 you do not have a lot of room for long introductions.

Please avoid relying too heavily on descriptive sections reproducing information available from the set text. It is your own logical, evaluation of the situation, the interpretation of course material and presentation, with critical analysis, of a coherent strategic report that will attract high marks.

Please note that the company names are fictitious and do not exist.

Word Limit: APC312 Money, Banking and Finance

The word count must be stated on the front page of your assignment.

Summarising and compressing the information in your assignment into the word limit is  one of the skills that students are expected to acquire and demonstrate as part of the assignment process.

The word limit is set as 3,000 words. If this is exceeded, then the following penalties be applied:

 

Penalty

Exceeds limit by up to 10%

No penalty – tolerance band

Exceeds limit by 10.1 - 20%

5 percentage points

Exceeds limit by 20.1 - 30%

10 percentage points

Exceeds limit by 30.1 - 40%

15 percentage points

Exceeds limit by 40.1 - 50%

20 percentage points

Exceeds limit by more than 50%

Mark of zero

The word count does not include:

Please note, in text citations [e.g. (Smith, 2011)] and direct secondary quotations [e.g. “dib-dab nonsense analysis” (Smith, 2011 p.123)] are included in the word count.

The Use of Tables:

Tables should not include large amounts of text which represent the main discussion and arguments, as these should be included in the main body of your work.

If tables are used inappropriately in this way the wording in question will be deemed to be part of the main body of the work and included in the word count (with the relevant penalty imposed where the maximum word count has been exceeded).


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