The assignment discusses ACC2830 Financial Project Management. There is also a description of Revenue and capital spending. So, review the sample business case template used.

ACC2830 Financial Project Management – Revenue and capital spending

Company A is a UK based company operating in the financial investment and consultancy field. The company recently bought a piece of land and wishes to construct a five storey office building block. With the view to relocate its staff to occupy two floors. Also, to rent out the remaining three floors to local businesses as office space. Project planning. Firstly, review the sample business case template used by the project managers. Also, comment on the usefulness of the information required from the business case document in helping management board in selecting appropriate projects.

ACC2830 Financial Project Management – Revenue and capital spending

Company A plans to take out a 5 year loan of between £1m to £2m to fund the initial investment cost. The remaining will be funded by its retained earnings. Select a loan amount within this range. Also, calculate the loan interest cost using an appropriate interest rate (between 3% and 5%). Firstly, assume there no opportunity cost for using retained earnings to fund the project. Secondly, assume the repayment of the principal loan in five equal installments at the end of each year with interest being paid at the end of each year on the reducing balance. Company A requires a minimum return of 8% on projects and a maximum payback period of 5 years. Thirdly, calculate the Net Present Value and Payback Period of the project. Fourthly, comment on your result.

ACC2830 Financial Project Management – Revenue and capital spending

The executive board wishes to know the actual costs of the project comparing to the budgeted amount. Prepare a summary analysis using Excel that compares the budgeted amount against the actual spending, showing the favourable/adverse variances against each cost line. (The actual spending is provided in the Excel dataset) Task 5 – Revenue and capital spending At the completion of the project, the executive wishes to know: (i) the total amount of project expenses that should be recognised on the Statement of Profit and Loss in the financial year ended 31 March 2018 and 31 March 2019 respectively, and (ii) the total amount of financial costs to be capitalised on the Statement of Financial Position at the project completion. Provide the above figures to the executive board and explain the cost treatment.

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