Project risk, finance, and monitoring

Assessment Information COMMONWEA LTH OF AUSTRALIA Copyright Regulations 1969 This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (‘Act’). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Kaplan Business School is a part of Kaplan Inc., a leading global provider of educational services. Kaplan Business School Pty Ltd ABN 86 098 181 947 is a registered higher education provider CRICOS Provider Code 02426B. Assessment Information Subject Code: MBA 643 Subject Name: Project risk, finance, and monitoring Assessment Title: Assessment 3: Individual R eport Weighting: 40 % Total Marks: 40 Due Date: Monday at 23:55 pm AEDT, Week 12 Assessment Description . In this assessment in Part A students are asked to imagine they have been engaged by Apple (Apple Inc APPL) (or a similar technology company ) to develop a report on key aspects of project risk management and how they might be used in proposed future project s in order to manage and limit risk . In Part B you are asked to conduct a capital budgeting analysis for the Apple Corporation . Content and process PART A (20 marks) Imagine you have been engaged by a technology company to develop a report on key asp ects of project risk management. Please chose a company in the technology sector (based anywhere in the world) and write a report to address the below areas. The report should begin with a short executive summary and conclude with several, short general recommendations.

The content you include in the report should link the project management principles detailed above with the practices of the technology company you have chosen. The topics on which students need to make recommendations in their report include: i) Project selection – How should the company you select determine what projects to undertake and what ones to avoid? What tools, measures, and practices ar e available to project analysts in this industry ? ii) Cost management – What is the role of project cost management for your chosen company ? Why is it important? What strategies or approaches should the company you have chosen adopt in order to effectively manage project costs? iii) Funding – What funding measures or options are generally available to assist companies like the one you have chosen to fund proposed new projects? The report should include reference to any implications associated with different fundi ng types or models. iv) Implementation and winding up – Are there any particular issues associated with commencing a project that your company must consider? Why are they important? Who do they impact or affect? What happens when the project finishes? How are projects wound up? Do they just end or are there resource or infrastructure considerations? Are there environmental issues associated with the end of a project? Assessment Information COMMONWEA LTH OF AUSTRALIA Copyright Regulations 1969 This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (‘Act’). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Kaplan Business School is a part of Kaplan Inc., a leading global provider of educational services. Kaplan Business School Pty Ltd ABN 86 098 181 947 is a registered higher education provider CRICOS Provider Code 02426B. Where possible, students should relate each section back to the company they have chosen . The e xecutive summary should bring together general recommendations for the student’s chosen company relating to i) -iv). Students should provide between 200 -400 words per topic, together with approximately 300 words in total for the executive summary and fina l recommendations. Rubric for Part A : Integrate project management theory with real -world company practices to make actionable recommendations on below topics Criteria Requirement Marks Available i) Project Selection Describe tools and practices used to select a project for the chosen company. Analyse an example of the practices used by your chosen to company to select between projects. 200 -400 words 3 marks ii) Cost Management Describe the role and importance of a cost manager and strategies to manage project costs. Recommend cost management strategies that your company should undertake with reference to theory and real -world data 200 -400 words 4 marks iii) Funding Describe the sources of funding for projects and the benefits o r costs of that funding (see topic 8). Evaluate what funding options are available to your chosen company and determine the implications of these options. 200 -400 words 4 marks iv) Implementation and winding up Outline the process and issues associated with starting and finishing a project. Evaluate resource, infrastructure and environmental issues to do with your 4 marks Assessment Information COMMONWEA LTH OF AUSTRALIA Copyright Regulations 1969 This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (‘Act’). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Kaplan Business School is a part of Kaplan Inc., a leading global provider of educational services. Kaplan Business School Pty Ltd ABN 86 098 181 947 is a registered higher education provider CRICOS Provider Code 02426B. company’s project implementations and make any relevant recommendations. 200 -400 words Summarise recommendation s for project risk management for your company with reference to the analysis conducted in the relevant topics Executive Summary, Conclusion and Recommendation The summary should briefly describe the main issues you identified in each section BUT MOST IMPO RTANTLY recommend to your chosen comp any the main things they MUST consider when managing/limiting risk in a project. This is about applying what you have learnt to ADVISE what key things they need to focus om 3 marks Conduct relevant research of proj ect management literature and market data and information relevant to your company. Acknowledge your sources. Appropriate in -text Harvard Referencing and reference list You must reference in text and have a reference list at the end of your assignment. See Harvard referencing guide on Academic Success Centre portal page. 2 marks Assessment Information COMMONWEA LTH OF AUSTRALIA Copyright Regulations 1969 This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (‘Act’). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Kaplan Business School is a part of Kaplan Inc., a leading global provider of educational services. Kaplan Business School Pty Ltd ABN 86 098 181 947 is a registered higher education provider CRICOS Provider Code 02426B. PART B (20 marks) Consider the following two sources and answer the following questions. Answer each question directly. You do not need to write a lot for each question and for some you will need to use excel calculations. Submit you excel spreadsheet together with your report Source 1 : Apple Yahoo Finance: https://finance.yahoo.com/quote/AAPL/ Source 2 : Forbes Apple Loop: Massive iPhone 11 Leaks, Tim Cook's Big Battery Problem, iPhone XR Price Cuts Ewan Spence Senior Contributor Following an investors report, some of the additional features for the iPhone family for the 2019 handsets have been revealed: a new antenna, improved WiFi, and a brighter light for facial recognition . Are these new features going to be enough to sell the 2019 iPhones in September? More Price Cuts Expected For iPhone XR But the biggest change in the iPhone line up could be a significant price cut on the iPhone XR. With sales of all three 2018 handsets contributing to Apple’s profit warning earlier this mo nth, analysts are predicting that the cuts to carrier subsidies will be followed by larger price cuts in the months to follow - and those cuts will be seen by consumers. A report that Apple would be rolling out iPhone price cuts across a range of models in China was also confirmed this month, with discounts of around 20% across the iPhone 8, iPhone 8 Plus and XR. The price cuts follow Apple’s warning that its earnings for the holiday quarter will be anywhere from $5B to $9B lower than the company originally forecast. The resulting shock has seen AAPL shares plunge further and analysts reduce their target price for the stock. Battery Replacements And Anticipating Problems How much of an impact did Apple’s battery replacement program have on sales of the iPho ne XR, XS, and XS Max (which lead to the profit warning earlier this month)? As John Gruber notes , Apple anticipated 1 -2 million battery replacements in a normal year, but saw 11 millio n under the replacement program. A few million extra iPhone users happy with the performance of their old iPhones with new batteries — who would have otherwise upgraded to a new iPhone this year — put a ding in the bottom line. And Finally… Apple’s awkwardly designed battery case (with ‘the hump’) has made its debut for the new XR, XS, and XS Max handsets. Source: https://www.forbes.com/sites/ewanspence/2019/01/18/apple -news -iphone -xr- iphone -11 -price -cut -new -leak -rumor -usbc -qualcomm -smart -battery -case/#f8aa27f1a8cf Assessment Information COMMONWEA LTH OF AUSTRALIA Copyright Regulations 1969 This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (‘Act’). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Kaplan Business School is a part of Kaplan Inc., a leading global provider of educational services. Kaplan Business School Pty Ltd ABN 86 098 181 947 is a registered higher education provider CRICOS Provider Code 02426B. a) According to the sources above does Apple currently have equity capital on issue? Why do companies raise equity capital? What has happened to the Apple share price in 2019 and why ha s this happened ? (you will need to do some research here) (6 marks) b) Below are details about a project Apple is undertaking. Please answer questions i-vi with the aid of an excel spreadsheet . You also need to answer the below questions in your word file and refer to your excel spreadsheets as a supporting document . Apple’s new IPhone XI • You are the financial analyst for Apple which is investing in a p roject to develop a new Iphone XI . • The project will last for 4 years and require an initial capital outlay on new Machinery of $5 million (paid today). • The plant will be depreciated to $1 million book value over the 4 years and can be sold in year 5 for $2 million. • The revenues from the sale of the new IPhone will be $2.8 million per year for the next four years (starting at the end of year 1). Variable costs will be 20% of revenues for the next four years. • Apple’s Research and Development department has spent $1 million researching dema nd for the new product as well as ways to address the battery problems and found that the project is feasible. The revenue for Apple’s existing IPhoneX product is expected drop by $1 million per year for the next four years as a result of the new product. • The project requires $30,000 for working capital immediately but it will not require any other working capital investments during its life. This working capital will be recovered in the last year of the project. • The tax rate is 30% • The project is funded only using ordinary shares which have a required return of 10%. So the cost of capital is 10%. i) What are the FCFs for this project? (5 marks) Assessment Information COMMONWEA LTH OF AUSTRALIA Copyright Regulations 1969 This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (‘Act’). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Kaplan Business School is a part of Kaplan Inc., a leading global provider of educational services. Kaplan Business School Pty Ltd ABN 86 098 181 947 is a registered higher education provider CRICOS Provider Code 02426B. 0 1 to 3 4 ∆NR ∆OpEx ∆EBITDA ∆D&A ∆EBIT (1-t) ∆NOPAT ∆D&A ∆CFO ∆CapEx Working Cap Salvage Value ∆FCF ii) What is the NPV of this project? (2 marks) iii) State whether Apple should invest in this project and explain why or why not based on your calculations, research and sources 1 -2. (2 marks) iv) Is funding this project with ordinary shares the cheapest way to finance? Why or why not? Imagine Apple could refinance using only bonds. Would this affect its NPV? Why or why not? (5 marks)