Faculty of Business and Law

ACADEMIC YEAR
2023 / 2024
COURSEWORK ASSESSMENT BRIEF

Module Code: UMADNJ-30-M

Module Title: Fundamentals of Accounting and Finance

Module Leader: Mr. Ruchira Perera

Case study: “TITANIUM LTD”

Submission details
Module title and code: UMADNJ-30-M Fundamentals of Accounting and Finance

Assessment type: (GROUP) Presentation

Assessment weighting: 30 per cent of total module mark

Size or length of assessment: 15-minute presentation

Module learning outcomes assessed by this task:

Learning Outcomes Tested by the GROUP presentation for UMADNJ-30-M

• MO1: Apply key tools of financial accounting and corporate financial management and recommend
solutions to business problems.

• MO2: Apply a range of business planning, forecast, evaluation and control tools to real world
situations including sensitivity, scenario and forecast analyses using computer spreadsheets.

• MO5: Evaluate and make recommendations on the appropriateness of an organisation’s control and
performance measurement systems.

• MO7: Demonstrate team working and presentation skills.

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Your role:
Roger Davis, the financial analyst of TITANIUM LTD.

Required:
You have been tasked by the Managing Director (MD) of TITANIUM LTD to produce the following
coursework element:

GROUP PRESENTATION: A 15-minute presentation on the investment appraisal of the proposed

project for the upcoming meeting with MD. The presentation should address the issues indicated in
the case study and include:

• An investment analysis of the proposed project discussed in the attached data. Your projected
cash flows should include the impact of corporation tax and capital allowances.
• A risk analysis, including sensitivity analysis, which shows the effects of a range of changes
in the estimates on the investment project’s NPV value.
• A discussion of other financial and non-financial factors involved in making investments in
the proposed project.

You will form a group of 4 members of your choice (You are not allowed to change your group). By
15th July 2024, you are required to submit your group name, group members, and group
representative to the module leaders. From that moment on, you will not be allowed to change
group. If you are not in any group by then, you will have to inform the module leaders who will then
allocate you to a group.

The group formation is your responsibility. Each group is required to set up minimum 3 meetings to
discuss the assignment issues. Each group should log the meeting minutes and record attendance for
each meeting. Group representatives should regularly meet the module leaders during office hours to
briefly discuss their progress. The details of office hours are available in the module Blackboard site.

The presentation schedule will be released in due course. Everyone in each group must attend the
presentation. 2 members from each group must present the work required. Full attendance will be
expected. 10% of your mark will come from peer assessment, you will be assessing your peers’
presentations. You will need to present your findings professionally and clearly. Your presentation
will be face to face on campus and limited by 15 minutes. You will be stopped if you have not
completed your presentation on time.

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CASE STUDY: TITANIUM LTD

Background

Investment Project Related Information

The management of Titanium Ltd is currently considering whether to establish a subsidiary

company in Altea, a country whose currency is the Zord. The management of Titanium Ltd
believes that the market for its products in Altea is expanding and that by producing locally,
Titanium Ltd will be able to sell into what has traditionally been a very difficult export
market.

The subsidiary company will require plant and equipment costing 7,800m Zords and land and
buildings costing 2,400m Zords, to be paid at the start of the first year of production. Initial
working capital of 800m Zords will also be required. The subsidiary company will be all
equity financed, 60% being provided by Titanium Ltd and 40% by investors in Altea.

At the end of four years, the management of Titanium Ltd believes that competitors will have
started production of similar products and remaining in the country will not be profitable.
Therefore, Altean investors will be offered all of Titanium's shares in the subsidiary at a price
based upon the subsidiary’s fourth year’s profit after tax (but before royalty fees), capitalized
at a price/earnings ratio of 12.

Sales in Altea are expected to be 7,500 units in the first year of production, rising by 750
units in each of the next three years. The selling price of one unit will be 650,000 Zords in
the first year, increasing by 15% per annum. Production costs, excluding depreciation, in
Altea are estimated to be 30% of sales value. The working capital requirements of the
subsidiary at the beginning of each year are expected to be equal to 20% of that year’s sales
revenue.

Titanium Ltd will supply its Altean subsidiary with specialized parts. These will be invoiced
in Zords at 130,000 Zords per unit of finished product, rising by 15% per annum. Titanium's
profit margin on these sales is estimated to be 40%. It is expected that the Altean company
will purchase these specialized parts from other suppliers when Titanium Ltd relinquishes
control.

In Altea, companies are taxed at a rate of 20% on accounting profits. Depreciation is an

allowable expense, provided it is calculated in the income statement on a straight-line basis
over five years. Land and buildings are not regarded as depreciable assets. Tax is paid one
year after the accounting period to which it relates and tax losses can be carried forward.

The Altean subsidiary will sign a royalty agreement entitling Titanium Ltd to 15% of the
subsidiary’s sales revenues payable at the end of each year. The royalty agreement expires at
the end of four years, after which time royalties will cease. Royalty payments are allowable
expense for tax purposes and are included in the calculation of accounting profit.

In its share prospectus to Altean investors, Titanium Ltd has stated that it will not levy any
management charges other than the royalty fee. The Altean subsidiary will distribute by way
of dividends all profit attributable to its shareholders. In Altea, a company cannot pay a
dividend until all past accounting losses have been extinguished.

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Foreign Exchange-Related Information

As a result of the worsening political climate in Altea, the rate of exchange between the Zord
and the British pound is expected to move in the pound’s favor, and the following rates of
exchange have been forecast (Zords to the British pound):

Year Exchange Rate (Zord / £)

0 800
1 880
2 968
3 1,064
4 1,168
5 1,281
Inflation-Related Information

In addition, the historical inflation rates for Altea are given in the table below:

Date RPI
Rate
1 January 2020 4.20%
1 January 2021 4.55%
1 January 2022 4.30%
1 January 2023 4.65%
1 January 2024 4.30%
Cost of Capital-Related Information

Titanium Ltd has a cost of capital of 13.15% for similar projects undertaken in the UK and
uses the following formula for calculating the discount factor to be applied to all foreign
investments:

Cost of capital for overseas projects:

UK cost of capital + Inflation premium + Country risk premium

where:

 Inflation premium is calculated as the simple arithmetic average of the last five
years’ inflation rates for the country the company is looking to invest in.
 Country risk premium is a subjective decision made by the analyst and usually
varies between 1% and 6%.

Macro-Economic-Related Information

The country analyst who was to report to the Finance Director has come back with some
information about the country itself. More specifically, he reported that the Altean
government is thinking of increasing the corporation tax rate from 20% to 30% on 1st
January 2025 in an attempt to increase the tax receipts from companies in an effort to

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improve the infrastructure of the country.

The new increased tax rate will still be lower than Altea’s neighboring country of Zephyria,
which at the moment taxes companies at 37%. Nonetheless, this increase in tax rates will
have to be voted for by the Altean Parliament and there is strong opposition to this proposal
by the minority parties, as it will significantly affect the companies operating in the country.

Furthermore, his macro-environmental analysis has shown that the economic and political
environment of Altea is to remain stable and improve in the medium-term, as many of the
government’s proposed policies are driving Altea’s economy forward. However, he believes
that in the short-term more measures need to be taken for these reforms to come into force.

Davis went home that evening with a very full briefcase and a number of unresolved questions.
1. How much of the information which he had gathered was really relevant to the decision?
2. What was the best approach to assessing the economic worth of the proposal, and why? The
company used payback and return on investment, but he felt that discounted cash flow
techniques had some merit.
3. Cash was particularly limited this year and acceptance of this project could mean that other
projects would have to be deferred. How should this be taken into consideration?
4. How should the strategic factors be assessed?
5. What about tax?
6. How would risk be assessed?
Required:
Prepare the case, with recommendations, to be presented by Davis at tomorrow’s meeting. The
presentation should address points 1-6 above.

Where should I start?

Carefully read the entire assignment brief, including its requirements, and attend the tutorial dedicated
to the assignment. You should form your group by the deadline and the group should quickly and
actively schedule some meetings to start working on the case study together. We recommend a
number of 3 or 4 meetings (not too few but not too many as they could disrupt your other studies;
efficiency in the meetings will help your case study completion). Attend the meeting as this is your
task but also a moral obligation to your team members.

What do I need to do to pass?

You are expected to do your best work as individual member of the team and as a group. However, in
order to pass you should, as a group, at a minimum attempt all the requirements and prepare some
slides and a presentation which covers the main points of your work. You should allow the markers to
see your workings rather than simply quickly skip slides and engage with the main sections of the
rubric (see marking criteria). In particular, ensure that you contribute to your group. Failure to work
actively in the group may cause you to fail and to not receive the same marks as other members of the
group. Attend your presentation as this is your assessment.
How do I achieve high marks in this assessment?
To achieve high marks, you are expected to show technical knowledge insofar as being able to
distinguish relevant and irrelevant cash flows, apply correctly multiple techniques of investment
appraisals, answer all case study requirements in your presentation, including a discussion of
sensitivity analysis with some professional visual aids (slides). Present strong conclusions showing a
logical flow and critically thought through arguments. Communication skills, evidence of effective
teamwork, organisation and time management will also contribute to your success.

Bear in mind that you have only 15 min to present your work. Your engagement should underpin your
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presentation rather than the presentation be an isolated event. Therefore, active engagement with the
module is very important - Do not miss your classes, especially the sessions dedicated to your
assignment. In this session, you will have further guidance and an opportunity to ask questions on the
assignment.

How does the learning and teaching relate to the assessment?

Particularly, the investment appraisal part (first 4 study units) is fundamental for the assignment.
However, all the module is interlinked and support your preparation for the assessment. Teaching
sessions and tutorials should give you the confidence and opportunity to explore your understanding
and ability to communicate knowledge to others.

What additional resources may help me complete this assessment?

 All Blackboard material on Investment Appraisal.
 You can consult staff up to 31st July 2024. Support given will be limited to exploring the
possible interpretations of the assignment.
 Your independent research and active contribution to the group work are also important.
 Some material on how to conduct in general a professional and effective presentation will be
given on Blackboard.

What do I do if I am concerned about completing this assessment?

UWE Bristol offer a range of Assessment Support Options that you can explore through this link, and
both Academic Support and Wellbeing Support are available.
For further information, please see the Academic Survival Guide.

How do I avoid an Assessment Offence on this module? 2

Use the support above if you feel unable to submit your own work for this module.
Avoid plagiarism (taking sentences, arguments, and chunks from somebody else’s work - for instance
from the Internet) and collusion with other students (that is working together on the same piece of
work) and other types of assessment offences. Make every effort to write your own sentences with
originality (not copied). Avoid contract cheating as having the work done by someone else is a
serious offence and is punished very heavily. Please refer to the UWE webpages for further
information at Assessment offences - Assessments | UWE Bristol.

Marks and Feedback

Your assessment will be marked according to the following marking criteria.
You can use these to evaluate your own work before you submit.

Group Presentation Marking Scheme

Group Name:
Team members’ names (10 members) Student Numbers
1.
2.
3.
..
For each criterion, rate the presentation between 1 (very poor) and 10 (very good)
Criteria Score Weight Total
Organisation 30%
 Clear introduction
 Rationale presented to support arguments
 Conclusion logically drawn from rationale
 Logical flow of discussion
Content 40%
 Topic addressed satisfactorily
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  Reasoning clearly with valid logic
 Evidence presented to support key points
 Critical evaluation of the case scenario in
arriving at recommendations
Team work and Q&A section 20%
 Clear demonstration of each member
contributing during the presentation and Q&A
 Individual accountability demonstrated during
Q&A
 Prompt answers, creative reasoning, and
persuasiveness
Visual aids and overall oral presentation 10%
 Proper use of visual aids
 Engaging with the audience
 Volume, enunciation, eye contact, gesture
Final Mark
Feedback From: Date:
Strengths of this assignment are:

Main ways to improve this assignment are:

Group Presentation Mark

Mark Peer Assessment Mark Final Mark

1. In line with UWE Bristol’s Assessment Content Limit Policy (formerly the Word Count
Policy), word count includes all text, including (but not limited to): the main body of text
(including headings), all citations (both in and out of brackets), text boxes, tables and graphs,
figures and diagrams, quotes, lists.

2. UWE Bristol’s UWE’s Assessment Offences Policy requires that you submit work that is
entirely your own and reflects your own learning, so it is important to:
 Ensure you reference all sources used, using the UWE Harvard system and the
guidance available on UWE’s Study Skills referencing pages.
 Avoid copying and pasting any work into this assessment, including your own
previous assessments, work from other students or internet sources
 Develop your own style, arguments and wording, so avoid copying sources and
changing individual words but keeping, essentially, the same sentences and/or
structures from other sources
 Never give your work to others who may copy it
 If an individual assessment, develop your own work and preparation, and do not
allow anyone to make amends on your work (including proof-readers, who may
highlight issues but not edit the work) and
When submitting your work, you will be required to confirm that the work is your own,
and text-matching software and other methods are routinely used to check submissions
against other submissions to the university and internet sources. Details of what constitutes
plagiarism and how to avoid it can be found on UWE’s Study Skills pages about avoiding
plagiarism.
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