Assessment 3: Business Case Studies 2 ACC00716 S1 2019
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ACC00716 Finance Session 1, 2019
Assessment 3: Business Case Studies 2
Due date: 19 May 2019, 11PM
This assignment has a 25% weighting in your overall mark for this unit and focuses on content from Weeks 6, 7 and 8. The assignment will be marked out of 25 and marks will be allocated as indicated in the rubric on page 4. Your total assignment submission will consist of a word document and a spreadsheet.
The assignment is based on the case information below. While the company and financial data in the case are fictitious1, the context is not. Many companies face similar investment decisions as well as challenges and opportunities to run more environmentally and socially responsible businesses.
DuoLever Limited operates in the personal care (e.g. skin and hair care products) industry. All its products are sold in plastic packaging and a significant proportion in multi-layer sachets (or pouches)2.
Managers at DuoLever are acutely aware of the increase in world production of plastic and the environmental impact of plastic waste ending up in landfills, rivers and oceans. For example, it is estimated that 8 million metric tons entered the ocean in 2010 and this annual amount is predicted to more than double by 2025, accumulating as show in the following graph3:
To help develop a closed-loop system related to the company’s products, DuoLever has invested around $50 million in soft plastic recycling research, development and pilot testing. The outcome is a new and efficient method for recycling sachet waste. In fact, their recycling method is more energy efficient than producing virgin sachet plastic, reducing energy usage by 83%. The output plastic is of
1 UniLever and its research and development in the area of multi-layer sachet recycling provides the inspiration for this case but all facts related to the financial analysis are fictitious.
2 While not necessary for attempting this case study, you will better understand the plastic packaging in this case context if you go to https://www.plasticpackagingfacts.org/blog/multi-layer-pouch-packaging-a-sustainable-story-animated/ and watch the video on multilayer plastic pouches. Although many improvements to this packaging have been made, as pointed out in the video, there remains much to do in reducing the impacts of waste pouches on the environment.
3 Estimates from Jambeck, J.R., Andrady, A., Geyer, R., Narayan, R., Perryman, M., Siegler, T., Wilcox, C., Lavender Law, K. (2015) Plastic waste inputs from land into the ocean, Science, 347, p. 768-771 and graph reproduced from p. 770. If you are interested, see see https://jambeck.engr.uga.edu/landplasticinput for further details and an infographic.
Assessment 3: Business Case Studies 2 ACC00716 S1 2019
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such high quality it can be used in food grade packaging applications. Currently, no other recycling method in the market can achieve this.
The company now faces a decision: should it (1) add production of recycled sachet plastic to the company’s portfolio of businesses or (2) license use of the patented method? The CEO has asked you to undertake a financial analysis of the options and present your recommendations in a short memo.
Option 1:
The recycling production option requires an upfront investment in plant and equipment of $20 million, which will be depreciated to a zero book value on a straight-line basis over 5 years. The plant will provide sufficient capacity to meet the company’s forecast plastic packaging needs over the period of its life. After this, it is expected that the plant will have no salvage value and will be updated using new and better technology. Financing for the plant and equipment will be via a new 5 year debt issue, resulting in interest costs of $1.4 million payable at the end of each year.
Producing recycled plastic has several financial benefits for the company. First, sales revenue of the company’s existing products, which will be packaged in the recycled plastic, is predicted to increase due to consumer demand for environmentally responsible products. Excluding this benefit, the company’s forecast sales revenue for the coming year is $200 million and this is expected to grow by 4% each year after that. The benefit of recycled packaging is expected to increase these sales forecasts 2% during the 5 year life of the project.
The second benefit is that the cost of plastic packaging for the company’s existing products will decrease. The recycled plastic will be cheaper than buying virgin plastic due to lower energy costs and avoiding a supplier margin. The reduced energy costs will shave 15% off total variable packaging costs, currently (without recycling) estimated at $22 million for the coming year and expected to grow by 3% per year after that. Avoiding a supplier margin will reduce total variable packaging costs by 10%. However, the benefits of avoiding the current supplier margin will be offset by the need to pay a new partner, Clean World Ltd, who will set up a plastic waste collection system to supply sufficient raw material for the recycling plant. Apart from these changes, it is expected that variable costs and net working capital will be equivalent to existing forecasts. However, an additional $2 million annually in selling, administrative and general expenses directly related to the project (excluding depreciation) will be incurred.
Option 2:
Option 2 involves licensing use of the patented recycling method to another company, Clean World Ltd, which has shown interest in taking on the entire project, not just supply of raw material. Initial negotiations between DuoLever and Clean World have reached some agreement on what the terms of the arrangement would involve. Clean World would produce recycled plastic using DuoLever’s method for the next 5 years and all output during that time would be supplied exclusively to DuoLever for the same cost as DuoLever’s existing virgin plastic supply forecasts. This means that Clean World would capture the energy savings associated with the new recycling method, along with a supplier margin. The benefits for DuoLever would be no initial outlay for plant and equipment and locked in packaging materials supply costs for the next 5 years. DuoLever would also retain the ability to market the environmentally responsible characteristics of its recycled packaging and so retain the expected
Assessment 3: Business Case Studies 2 ACC00716 S1 2019
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additional sales revenue benefits of Option 1. Annual selling, administrative and general expenses would be just $1 million annually under Option 2, as no additional production administration would be required.
Other information:
DuoLever has an 8% weighted average cost of capital and is subject to a 25% tax rate on its income.
Required:
Prepare (1) a spreadsheet financial analysis of the proposed options and (2) a memo to DuoLever’s CEO that briefly explains and justifies your chosen methods, inputs and any assumptions made, summarises your findings, and presents your recommendations on the proposed options. Ensure you not only address base case cash flows but also analyse potential uncertainty. Recommendations should address the decision to be made, along with any further follow up or other matters the company should consider prior to making a final decision.
Instructions:
Submit your spreadsheet separately in the provided spreadsheet link in the BCS2 section of the unit site. By submitting the spreadsheet, you are confirming that it is entirely your own work. Save the spreadsheet with your details in the file name using the following format (failure to do so could result in your spreadsheet not being considered in marking):
Student ID_Full_name_ACC00716A3
For example: 13579246_Jennifer_Harrison_ACC00716A3
The memo will be submitted as a word document via a Turnitin assignment link in the BCS2 section of the unit site and include your name, student ID, unit code (ACC00716), assessment number (A3) and word count at the beginning of the document. The remainder of the document should be set up as a formal memo and include an appendix with a screen shot(s) of your base case figures from the spreadsheet. Within the memo body, you may provide tables and figures that are discussed in the text and assist decision makers understand your methods, findings and their implications for decision making. The word document submission must not exceed 1,000 words (excluding the screen shot appendix and reference list).
This is an individual assessment exercise. The unit teaching team is very experienced at marking such assessments and recognising the differences between individual and “group” work, as well as data, facts, statements and ideas of others that have not been appropriately acknowledged. To avoid any potential for academic misconduct investigation, ensure that every aspect of your work is your own and that you acknowledge all sources you have directly drawn upon in your submitted work. Quotations should be shown as such. We are not fussy about referencing style, just that you reference when needed.
Assessment 3: Business Case Studies 2 ACC00716 S1 2019
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MARKING CRITERIA
Excellent
Very Good
Good
Satisfactory
Poor
Accurate estimation of relevant base case cash flows and decision criteria (12 marks)
All relevant base case cash flows have been accurately incorporated into the analysis and net cash flows and decision criteria are correct. (12 marks)
Nearly all relevant base case cash flows have been accurately incorporated into the analysis and decision criteria are correct based on your net cash flows (10 marks)
Most relevant base case cash flows have been accurately incorporated into the analysis and decision criteria are mostly correct based on your net cash flows. (8 marks)
About half the relevant base case cash flows have been accurately incorporated into the analysis and decision criteria are mostly correct based on your net cash flows. (6 marks)
Less than half the relevant base case cash flows have been accurately incorporated into the analysis and decision criteria may be mostly incorrect based on your net cash flows. (0 to 4 marks)
Accurate and appropriate analysis of uncertainty (5 marks)
You have accurately analysed project uncertainty using appropriate techniques. You have shown insight by judicious input choices that are well-articulated and linked to case facts. The analysis is easy to follow. (5 marks)
You have accurately analysed project uncertainty using appropriate techniques and judicious input choices that are mostly well-articulated and linked to case facts. The analysis is easy to follow. (4 marks)
You have analysed project uncertainty using appropriate techniques and mostly judicious input choices that are mostly well-articulated and linked to case facts. The analysis is easy to follow. (3.5 marks)
You have analysed project uncertainty using at least one appropriate technique. Input choices lack justification, are unreasonable or the analysis is not easy to follow. (2.5 marks)
You have not analysed project uncertainty using appropriate techniques or have attempted to use at least one appropriate technique but with no demonstrated consideration of input choices in a hard to follow analysis or there are major inaccuracies. (0 to 2 marks)
Appropriate interpretation and recommendations based on the project analysis (8 marks)
You have accurately interpreted the results of your financial analysis and made appropriate and insightful recommendations with the basis of those recommendations clearly and concisely explained. Recommendations go further than simply accepting or rejecting the project by recognising the subtleties of project decision making and needed additional analysis or considerations. Use of language makes meaning consistently clear; no or very few grammar, syntax and spelling errors. (8 marks)
You have accurately interpreted the results of your financial analysis and made appropriate recommendations. Recommendations go further than simply accepting or rejecting the project by recognising some subtleties of project decision making and/or needed additional analysis or considerations. Use of language mostly makes meaning clear; no or very few grammar, syntax and spelling errors. (6.5 marks)
You have accurately interpreted most of the results of your financial analysis and made some appropriate recommendations. Subtleties of project analysis and decision making have generally not been recognised. Use of language mostly makes meaning clear; several grammar, syntax and spelling errors. (5.5 marks)
You have accurately interpreted some of the results of your financial analysis and made at least one appropriate recommendation. Use of language mostly makes meaning clear; several grammar, syntax and spelling errors. (4 marks)
You have not correctly interpreted most results from your financial analysis or no recommendations have been made or recommendations do not follow from the results or interpretation. Use of language mostly makes meaning unclear; many grammar, syntax and spelling errors. (0 to 3 marks)
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Assignment 2
AT2 Marking Guide & Rubric 2020
Risk Assessment Plan
DUE 8PM MONDAY SEPTEMBER 21
Overview
Brief description of assessment task
Formulate a risk assessment plan to define and characterise the potential influence of environmental factors.
Detail of student output
A written document (2000 words +/- 10%) plus references (at least 6 and these as well as the intext citations are not included in the word count).
Grading and Weight (% total mark for unit)
45%
Unit Learning Outcomes
ULO1: Identify key national and international environmental health agencies, as well as regulatory programs, guidelines and authorities that control environmental health issues; this will be achieved by you demonstrating your understanding of core health protection principles.
ULO2: Explain environmental health safety standards and related management procedures; this will be achieved by you demonstrating your knowledge or appropriate responses to risks.
ULO3: Review and interpret environmental health data, including toxicology and ecology; this will be achieved by you providing actions and priorities relevant to the risks.
ULO5: Critique plans and strategies that define and characterise the environmental factors that influence health; this will be achieved by you providing context to risks and the consequence steps in management of the risks.
Graduate Learning Outcomes
GLO1: Discipline-specific knowledge and capabilities: appropriate to the level of study related to a discipline or profession; this will be achieved by you analysing and discussing material relevant to the unit content.
GLO2: Communication: using oral, written and interpersonal communication to inform, motivate and effect change; this will be achieved by you effectively communicating information on health protection issues in written form.
GLO3: Digital literacy: using technologies to find, use and disseminate information; this will be achieved by using a wide range of sources online to inform your risk management plan.
GLO4: Critical thinking: evaluating information using critical and analytical thinking and judgment; this will be achieved by you analysing and interpreting health information relevant to health protection risks.
GLO5: Problem solving: creating solutions to authentic (real world and ill-defined) problems; this will be achieved by you providing recommendations and solutions to the risks that you have researched.
1 AT2 Marking Guide & Rubric 2020
Details Note that point 1 is covered in Part A, while points 2-6 are covered in Part B. Part B can be Consists of two parts: completed in table form and is a 1000 word
equivalent component of the assignment.
A. 1000 (+/- 10%) word report on the context
of the risk, with a choice of: You must refer to the AT2 Risk Rating Criteria pdf to determine the likelihood and
1. Music festival in rural setting consequences of the risks you identify.
2. Community/farmers’ market
3. Local sporting event for children at You then must complete the AT2 Risk suburban park Assessment Plan Template doc and submit that
4. Fund-raising event at the beach as your Part A and Part B assessment.
You will need to follow this procedure for the entire assignment (this is in accordance with the Australian/New Zealand Standard on Risk Management AS/NZS ISO 31000:2018):
1. establishing context – identifying the basic parameters in which risk must be managed (e.g. of the choices provided above). This will address part A.
2. avoiding risk – establishing whether there is a risk and whether potential risk can be averted (e.g. by questioning whether a procedure is necessary).
3. identifying risks – a systematic and comprehensive process that ensures that no potential risk is excluded from further analysis and treatment (e.g. using root cause analysis).
4. analysing risks – considering the sources of risk, their consequences, the likelihood that those consequences may occur, and factors that affect consequences and likelihood (e.g. existing controls).
5. evaluating risks – comparing the level of risk found during the analysis process with previously established risk criteria and assessing available options for ease of implementation and impact, resulting in a prioritised list of risks for further action.
6. treating risks – implementing appropriate management options for dealing with identified risk (e.g. modifying procedures, protocols or work practices; providing education; and monitoring compliance with infection prevention and control procedures). one file needs to be submitted.
Please note that this assessment is in alignment with the Council of Academic Public
Health Institutions Public Health competencies. Australasia’s (CAPHIA)
Graduate foundation
B. Completion of risk management plan Parts A and B are in the same template, so only
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AT2 Marking Guide & Rubric 2020
Assessment Criterion Exemplar Accomplished Competent Developing Beginning
Context (approx. 1000 words):
Points to consider:
Defining scope of event/situation
Organisations involved
Identification of stakeholders & objectives
Determining levels of acceptable risk Identified topic clearly. Described context related to that topic with extensive and informed discussion.
= 16 – 20 marks Identified topic clearly.
Described context related to that topic with significant informed discussion.
= 14 – 15 marks Identified topic. Described context but not clearly related to that topic with some informed discussion.
= 12 – 13 marks Partially Identified topic.
Limited discussion on context.
= 10 – 11 marks Context discussion absent or unclear.
= 0 – 9 marks
Risk descriptions & controls:
Points to consider:
Sources
Descriptions
Controls Risk procedures cover all points extensively. At least 6 different risks covered.
= 24 – 30 marks Risk procedures cover all points significantly. 4-5 different risks covered
= 21 – 23.5 marks
Risk procedures cover all points reasonably. 2-3 different risks
covered
= 18 – 20.5 marks
Risk procedures cover some points in limited detail.
1 risk covered
= 15 – 17.5 marks
Risk procedures are not covered or are unclear.
0-1 risk covered
= 0 – 14.5 marks
Risk analysis & evaluation:
Points to consider:
Risk Ratings
Avoiding risks
Identifying risks
Risk analysis
Evaluating risks
Treating risks Perceptive planning on the event/situation.
= 24 – 30 marks Clear planning on the event/situation.
= 21 – 23.5 marks Some planning on the event/situation.
= 18 – 20.5 marks Unclear planning on the event/situation.
= 15 – 17.5 marks Planning absent, unclear or not related to the event/situation.
= 0 – 14.5 marks
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AT2 Marking Guide & Rubric 2020
Assessment Criterion Exemplar Accomplished Competent Developing Beginning
Expression:
The plan is well written, grammatically correct, and contains no spelling or typing mistakes.
Writing is of a consistently very high standard with no
errors in spelling/ punctuation/grammar.
= 4 – 5 marks Writing is of a consistently high standard with minimal errors in spelling/ punctuation/grammar.
= 3.5 marks Writing is mostly of a good standard with some errors in spelling/ punctuation/grammar.
= 3 marks Writing needs improving. A number of errors evident with regard to spelling/punctuation/ grammar. A final edit to eliminate all errors would enhance the professionalism of this strategy proposal.
= 2.5 marks Writing is of an unsatisfactory standard with frequent errors in spelling/punctuation/ grammar. This strategy proposal requires careful
editing to lift it to an acceptable academic standard.
= 0 – 2 marks
Formatting requirements:
Black font, size 12, Arial or Calibri, margins approx. 2cm, 1.5 line spacing, pages numbered with student’s name on each page. Paragraphs used. Word count included at end of report. No formatting errors.
Overall excellent standard of report presentation.
= 4 – 5 marks One formatting error.
= 3.5 marks Two formatting errors.
= 3 marks Three formatting errors. A final edit to eliminate all errors would enhance the professionalism of this assignment.
= 2.5 marks More than three formatting errors.
= 0 – 2 marks
References:
The plan is well referenced.
References must be within a date range of 2010-2020.
HARVARD Style maintained throughout Referencing is exceptional, mainly high-quality sources (i.e. peer-reviewed journals and gov/NGO reports), all references correct and more than 6 references used.
= 4 – 5 marks Referencing is of a high standard, some highquality sources (i.e. mix of peer-reviewed journals and gov/NGO reports), all references correct, and 6 references used.
= 3.5 marks Referencing is mostly of a good standard, a few quality sources, and 6 references used.
= 3 marks Referencing needs improving, a number of errors evident and less than 6 references used.
= 2.5 marks Referencing is of an unsatisfactory standard, with frequent errors and less than 6 references used OR no references used.
This plan requires
attention to detail to lift it
to an acceptable academic standard.
= 0 – 2 marks
TOTAL /95
ADJUSTED TOTAL MARK /45
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