Assignment 1 instructions:

Dear students,

Your first assignment has now been assigned to you. This assignment is due on 31st Dec 2021 at

11:59PM on BLACKBOARD. Here are some instructions for you:

1. This is a GROUP work. 4 students MAX or 4 students MIN.

2. Please write your Names, Student IDs, and Tutorial Section on your file name and on

bottom of the document.

3. Answer all questions directly on an Excel file. Save the file: file name should be as

follows: A2_LastName_1.

4. There are 4 questions in this assignment, and you need to answer them all. These questions fall into 4 different categories:

a. Part 1 - Compute Payback, NPV, and IRR for both projects (40%)

b. Part 2 - Evaluate the projects' acceptability using all three decision criteria from

previous question. (25%)

c. Part 3 - Rank the two projects according to Profitability Index and analyze.

(30%)

d. Part 4 - Research, Explain and Make some suggestions (5%)

The submission of this assignment will only be on BLACKBOARD.

In order to get a full mark, make sure to achieve these aspects:

Clear focus

Completeness Fully answers the questions

Correctness Answers the questions correctly

Demonstrate insights and analysis into the issue

Assoc. Prof. Dr. Bora AKTAN FIN220 Financial Management-I

Project Analysis (Excel): Ali Yaqoob Yusuf

To: Ali Yaqoob Yusuf

From: Bryan Harris, Chief Financial Officer, ALBA

RE: Capital Budgeting Analysis www.albasmelter.com Provide an evaluation of three proposed projects whose cash flow forecasts are found below:

Year 1

Year 2

Year 3

Year 4 0 Year 5

Year 6

relies on several criteria when evaluating new investment opportunities. In particular, we require that

Ali graduated from University of Bahrain, College of Business Administration in July and

has been working for about a month as a Junior Financial Analyst at Aluminium Bahrain

B.S.C. (#ALBA), one of the largest and most modern aluminium smelters in the world. When

Ali arrived at work on Thursday morning, he found the following memo in his e-mail:

Initial Outlay

Potline 7a

BHD (11,000,000)

Potline 7b

BHD (16,950,000)

Potline 7c

BHD (14,100,000)

3,000,000

8,100,000

3,900,000

3,000,000

2,900,000

3,900,000

4,000,000

4,400,000

3,900,000

(1,400,000)

3,900,000

7,000,000

8,100,000

3,900,000

7,000,000

8,100,000

3,900,000

Since these projects involve additions to ALBAs portfolio of high-quality aluminium product line, the

company requires a rate of return on those projects equal to 11,90%. As you are no doubt aware, ALBA

projects that are accepted have a payback of no more than 4 years, provide a positive NPV, and have

an IRR that exceeds the companys discount rate.

Give me your thoughts on these three projects by 9am Sunday morning.

Ali was not surprised by the memo, for he had been expecting something like this for some time. ALBA

followed a practice of testing each new financial analyst with some type of project evaluation exercise

after the new hire had been on the job for a few months.

After re-reading the memo, Ali decided on his plan of attack. Specifically, he would first do the obligatory

calculations of Payback, NPV, and IRR for both projects. Abdulbaqi knew that the CFO would grill him

thoroughly on Sunday morning about his analysis, so he wanted to prepare well for the experience.

One of the things that occurred to Ali was that the memo did not indicate whether the three projects

were independent or mutually exclusive. So, just to be safe, he thought he had better rank the two

projects under all assumptions in case he was asked to do so on Sunday morning. Ali sat down and

made up the following "to do" list:

1. Compute Payback, NPV, and IRR for all projects. (4 marks)

1) Richard Brealey. 2017. Principles of Corporate Finance, McGraw Hill, New York Note that Google copy-paste will result in 0 (zero)! (5 marks)

2. Evaluate the projects' acceptability using all three decision criteria (listed above) and based on the

assumptions that the projects are both independent and mutually exclusive. (4 marks)

3. Rank the projects according to Profitability Index (PI) and make a recommendation as to which (if

either) should be accepted under the assumption that the projects are mutually exclusive. (2 marks)

4. What would you do if economic lives of the projects were unequal? Research, Explain and Make

some suggestions based on the assumption that the projects are mutually exclusive. Also list the

sources you have benefited such as

Assoc. Prof. Dr. Bora AKTAN FIN220 Financial Management- Assignment 1 instructions: Dear students, Your first assignment has now been assigned to you. This assignment is due on 31st Dec 2021 at 11:59PM on BLACKBOARD. Here are some instructions for you: 1. This is a GROUP work. 4 students MAX or 4 students MIN. 2. Please write your Names, Student IDs, and Tutorial Section on your file name and on bottom of the document. 3. Answer all questions directly on an Excel file. Save the file: file name should be as follows: A2_LastName_1. 4. There are 4 questions in this assignment, and you need to answer them all. These questions fall into 4 different categories: a. Part 1 - Compute Payback, NPV, and IRR for both projects (40%) b. Part 2 - Evaluate the projects' acceptability using all three decision criteria from previous question. (25%) c. Part 3 - Rank the two projects according to Profitability Index and analyze. (30%) d. Part 4 - Research, Explain and Make some suggestions (5%) The submission of this assignment will only be on BLACKBOARD. In order to get a full mark, make sure to achieve these aspects: Clear focus Completeness - Fully answers the questions Correctness - Answers the questions correctly Demonstrate insights and analysis into the issue . Assoc. Prot. Dr. Bora AKTAN FIN220 Financial Management 22 Project Analysis (Excel): Ali Yaqoob Yusuf Ali graduated from University of Bahrain, College of Business Administration in July and has been working for about a month as a Junior Financial Analyst at Aluminium Bahrain B.S.C. (#ALBA), one of the largest and most modern aluminium smelters in the world. When Ali arrived at work on Thursday morning, he found the following memo in his e-mail: To: Ali Yaqoob Yusuf alba From: Bryan Harris, Chief Financial Officer, ALBA RE: Capital Budgeting Analysis www.albasmeten.com Provide an evaluation of three proposed projects whose cash flow forecasts are found below: Initial Outlay Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Potline 7a BHD (11,000,000) 3,000,000 3,000,000 4,000,000 0 7,000,000 7,000,000 Potline 7 BHD (16,950.000) 8,100,000 2.900.000 4,400.000 (1.400.000 8.100.000 8.100.000 Potline 70 BHD (14,100,000) 3.900,000 3.900.000 3.900.000 3.900.000 3,900,000 3.900,000 Since these projects involve additions to ALBA's portfolio of high-quality aluminium product line, the company requires a rate of return on those projects equal to 11,90%. As you are no doubt aware, ALBA relies on several criteria when evaluating new investment opportunities. In particular, we require that projects that are accepted have a payback or no more than 4 years, provide a positive NPV, and have an IRR that exceeds the company's discount rate. Give me your thoughts on these three projects by Sam Sunday morning, Ali was not surprised by the memo for he had been expecting something like this for some time. ALBA followed a practice of testing each new financial analyst with some type of project evaluation exercise after the new hire had been on the job for a few w months After re-reading the memo, Ali decided on his plan of attack. Specifically, he would first do the obligatory calculations of Payback, NPV, and IRR for both projects. Abdulbagi knew that the CFO would grill him thoroughly on Sunday morning about his analysis, so he wanted to prepare well for the experience One of the things that occurred to Ali was that the memo did not indicate whether the three projects were independent or mutually exclusive. So, just to be safe, he thought he had better rank the two projects under all assumptions in case he was asked to do so on Sunday moming. All sat down and made up the following to do ist: 1. Compute Payback NPV, and IRR for all projects. (4 marks) 2 Evaluate the projects' acceptability using all three decision criteria (listed above) and based on the assumptions that the projects are both independent and mutually exclusive. (4 marks) 3. Rank the projects according to profitability Index (Pl) and make a recommendation as to which ar either) should be accepted under the assumption that the projects are mutually exclusive. (2 marks) 4. What would you do if economic lives of the projects were unequal? Research, Explain and Make some suggestions based on the assumption that the projects are mutually exclusive Also list the sources you have benefited such as 1) Richard Brealey 2017. "Principles of Corporate Finance" McGraw Hill, New York Note that Google copy-paste will result in 0 (zero)! (5 marks) Assoc. Prof. Dr. Bora AKTAN FIN220 Financial Management- 3. Rank the projects according to profitability Index (PI) and make a recommendation as to which (if either) should be accepted under the assumption that the projects are mutually exclusive. (2 marks) 4. What would you do if economic lives of the projects were unequal? Research, Explain and Make some suggestions based on the assumption that the projects are mutually exclusive. Also list the sources you have benefited such as 1) Richard Brealey. 2017. "Principles of Corporate Finance", McGraw Hill, New York Note that Google copy-paste will result in 0 (zero) (5 marks) Assoc. Prof. Dr. Bora AKTAN FIN220 Financial Management- Assignment 1 instructions: Dear students, Your first assignment has now been assigned to you. This assignment is due on 31st Dec 2021 at 11:59PM on BLACKBOARD. Here are some instructions for you: 1. This is a GROUP work. 4 students MAX or 4 students MIN. 2. Please write your Names, Student IDs, and Tutorial Section on your file name and on bottom of the document. 3. Answer all questions directly on an Excel file. Save the file: file name should be as follows: A2_LastName_1. 4. There are 4 questions in this assignment, and you need to answer them all. These questions fall into 4 different categories: a. Part 1 - Compute Payback, NPV, and IRR for both projects (40%) b. Part 2 - Evaluate the projects' acceptability using all three decision criteria from previous question. (25%) c. Part 3 - Rank the two projects according to Profitability Index and analyze. (30%) d. Part 4 - Research, Explain and Make some suggestions (5%) The submission of this assignment will only be on BLACKBOARD. In order to get a full mark, make sure to achieve these aspects: Clear focus Completeness - Fully answers the questions Correctness - Answers the questions correctly Demonstrate insights and analysis into the issue . Assoc. Prot. Dr. Bora AKTAN FIN220 Financial Management 22 Project Analysis (Excel): Ali Yaqoob Yusuf Ali graduated from University of Bahrain, College of Business Administration in July and has been working for about a month as a Junior Financial Analyst at Aluminium Bahrain B.S.C. (#ALBA), one of the largest and most modern aluminium smelters in the world. When Ali arrived at work on Thursday morning, he found the following memo in his e-mail: To: Ali Yaqoob Yusuf alba From: Bryan Harris, Chief Financial Officer, ALBA RE: Capital Budgeting Analysis www.albasmeten.com Provide an evaluation of three proposed projects whose cash flow forecasts are found below: Initial Outlay Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Potline 7a BHD (11,000,000) 3,000,000 3,000,000 4,000,000 0 7,000,000 7,000,000 Potline 7 BHD (16,950.000) 8,100,000 2.900.000 4,400.000 (1.400.000 8.100.000 8.100.000 Potline 70 BHD (14,100,000) 3.900,000 3.900.000 3.900.000 3.900.000 3,900,000 3.900,000 Since these projects involve additions to ALBA's portfolio of high-quality aluminium product line, the company requires a rate of return on those projects equal to 11,90%. As you are no doubt aware, ALBA relies on several criteria when evaluating new investment opportunities. In particular, we require that projects that are accepted have a payback or no more than 4 years, provide a positive NPV, and have an IRR that exceeds the company's discount rate. Give me your thoughts on these three projects by Sam Sunday morning, Ali was not surprised by the memo for he had been expecting something like this for some time. ALBA followed a practice of testing each new financial analyst with some type of project evaluation exercise after the new hire had been on the job for a few w months After re-reading the memo, Ali decided on his plan of attack. Specifically, he would first do the obligatory calculations of Payback, NPV, and IRR for both projects. Abdulbagi knew that the CFO would grill him thoroughly on Sunday morning about his analysis, so he wanted to prepare well for the experience One of the things that occurred to Ali was that the memo did not indicate whether the three projects were independent or mutually exclusive. So, just to be safe, he thought he had better rank the two projects under all assumptions in case he was asked to do so on Sunday moming. All sat down and made up the following to do ist: 1. Compute Payback NPV, and IRR for all projects. (4 marks) 2 Evaluate the projects' acceptability using all three decision criteria (listed above) and based on the assumptions that the projects are both independent and mutually exclusive. (4 marks) 3. Rank the projects according to profitability Index (Pl) and make a recommendation as to which ar either) should be accepted under the assumption that the projects are mutually exclusive. (2 marks) 4. What would you do if economic lives of the projects were unequal? Research, Explain and Make some suggestions based on the assumption that the projects are mutually exclusive Also list the sources you have benefited such as 1) Richard Brealey 2017. "Principles of Corporate Finance" McGraw Hill, New York Note that Google copy-paste will result in 0 (zero)! (5 marks) Assoc. Prof. Dr. Bora AKTAN FIN220 Financial Management- 3. Rank the projects according to profitability Index (PI) and make a recommendation as to which (if either) should be accepted under the assumption that the projects are mutually exclusive. (2 marks) 4. What would you do if economic lives of the projects were unequal? Research, Explain and Make some suggestions based on the assumption that the projects are mutually exclusive. Also list the sources you have benefited such as 1) Richard Brealey. 2017. "Principles of Corporate Finance", McGraw Hill, New York Note that Google copy-paste will result in 0 (zero)