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BFW2341
International Financial Management
Assessment 3
Learning Outcomes
This assignment assesses the following learning outcomes:
|
Learning Outcome Number |
Learning Outcome Description |
|
LO1 |
Explore the international financial environment and the importance of foreign exchange risk management. |
|
LO2 |
Explain the important financial management issues and their application to financial management of multinational firms. |
|
LO4 |
Apply capital budgeting techniques in the context of a multinational firm. |
|
LO5 |
Apply critical thinking, problem solving and presentation skills to individual activities dealing with international financial management and demonstrate in an individualsummative assessment task the acquisition of a comprehensive understanding of the topics covered by BFW2341. |
Weighting
This assignment is worth 40% of your overall grade for this unit.
Requirements
This assignment has the following requirements:
|
Assignment Type |
Group (4-5 members) |
|
Response Format |
Presentation and Excel Submission |
|
Response Specifications |
To complete Part A (35%) and Part B (5%) |
|
Due Date |
4.30 pm (Malaysian Time), 23 May 2024 |
|
Submission Process |
Submit with Moodle |
|
Notes: |
o Students group allocation will be updated on Moodle. o All groups will present all of your findings for 18- 20 minutes (Max) o Students must be prepared for a 5-minute Q&A session after the presentation. o One Student From each group is required to submit the presentation slides and excel sheet by 23rd May 4.30pm. o Presentations will beheld on week 12 during Tutorial Class |
Assignment Instructions
BFW2341 S1 2023 Assessment 3 - Group
Student Name:
Student ID:
Strategic Planning Assignment - Part A (35%)
This part of the assessment will be evaluated only based on your presentation and does not have a report requirement.
Nestle (Malaysia) Berhad (Food and Beverage)
Strategy Planning and Presentation
Due date: Lecture week 12
Weighting/value: 35%
Unit learning outcomes assessed 1,2,4 & 5
Submission: Submission via Moodle
Note: Required to submit power point slides and excel sheet by 23rd May 4.30pm (Thursday).
Detail of task: Part A (35%) - Group Presentation
• Students shall form their group with at least 4 and a maximum of 5 members from the same tutorial.
• Any dispute among group members should be brought to the lecturer’s attention (in writing) at least 14 days before the deadline.
• The lecturer reserves the right to vary the marks of individual group members where
(a) contribution/performance varies significantly, or
(b) pursuant to an investigation into the alleged incidence of “free-loading” .
• General instructions:
o In your group, you shall conduct research on Nestle (Malaysia) Berhad – focused on consumer products and services (stock code 4707 in Bursa Malaysia, Ticker and Exchange (NESTLE) has amarket capital size of 28.28 billion MYR and suggest a maximum of three (3) business strategies based on key issues that the company is facing.
o The three strategies should include at least one strategy in the area of financial management. All strategies must address the issues that the firm is facing or might potentially face (focus on issues faced within last 3 years or might potentially face)
Suggestions:
1. Financial issues, Strategies & Implementation plan
For example, the key issues faced by the company in recent times such as return performance (i.e., profitability), forex exposure, etc. and how much it is fulfilling shareholder’s wealth or affecting the value of the firm. Refer to P/L statement to identify cost and expenses issues or any losses due to currency exposure, which ever you find relevant to apply as your finding’s issues.
2. Other issues
Management issues, sustainability issues, other relevant issues Nestle is facing in recent times and the issue(s) found must be clearly justified with relevant evidence(s).
o The strategies provided to solve the issues must be presented with the implementation plans including the estimated impact on the firm’s financial position or firm’svalue.
o Students can obtain the relevant documents and findings from relevant sources such as;
Annual Reports / Financial Statements (2022 & 2023)
CEO comment
Corporate view
Management view
Financial view
Latest news and article
Presentation Details
o All groups will present all of your findings for 18-20 minutes (Max)
o Students must be prepared for a 5-minute Q&A session after the presentation.
o Presentations will beheld on week 12 during tutorial sessions.
Strategic Planning Assignment - Part B (5%)
Capital Budgeting
Testlo Inc. is aU.S.-based electric car manufacturer. The company will invest 58 million U.S. dollars in setting up a new subsidiary in Malaysia. The company will use electronic components from the U.S. and source other components locally.
Testlo will utilise local labour to assemble and sell the finished products locally. The company expects the project to last for ten years. The expected revenues for the first three years are MYR 67 million, MYR 75 million, and MYR 82 million. It will grow 5.74% annually afterwards. The company expects 0.3 ringgit (MYR) of variable cost for every ringgit of revenue. The fixed costs, including wages, leasing and rental charges, insurance, and maintenance fees, are 18 million ringgit annually. The depreciation is 3 million ringgit per year based on the straight-line method. The subsidiary will remit 60% of the net cash flow to the parent company at the end of the year.
The corporate tax rate in Malaysia is 21%. However, by adopting green technology, Testlo Inc. will receive a lower tax rate of 7% for the first five (5) years. Remittances from Malaysia to the United States are tax exempted. Malaysia imposes a 19% withholding tax and a 3% tax rate on the remittance of foreign-sourced income received in Malaysia. The company will assume a fixed exchange rate of USD 0.35/MYR for the project. The parent company has a cost of capital of 14%. Testlo Inc. estimates the subsidiary will have a 14-million-ringgit salvage value at the end of the project.
(a) Prepare a capital budgeting analysis for this Malaysian. [3 marks]
(b) Based on part (a), suppose the Malaysian government passes legislation to allow the repatriation of divestment proceeds, profits, dividends or any income arising from investments in Malaysia up to 10 million ringgit per year for businesses whose commencement date of commercial operation is less than 48 months. If Testlo aims to remit the maximum amount allowed under the Malaysian rules as soon as possible and if the subsidiary can invest the retained cash flows in Malaysia for 9% per annum.
(Note: Advice to use tutorial 10 excel sheet as a template for this exercise]
[2 marks]