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Department of Accounting and Finance

AFW1000 Principles of accounting and finance
Mode: On-campus Semester 2
Unit Coordinator: Ravi Narayanan This unit is taught at the following Monash campuses: Berwick, Peninsula, Sunway and also at Singapore through TMC Educational Group. These campuses and institutions have their own lecturer in charge of teaching and administering the unit. These campus based lecturers should be the first contact point for students who are enrolled at their campus. You will be advised, via oncampus lectures, memo or Blackboard, at the commencement of semester, the names of the teaching staff involved and their contact information and consultation availability.

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Time commitment This unit is worth six (6) credit points. revision. you should plan to spend an additional 117 hours during the semester in study for this unit. Unit objectives The learning goals associated with this unit are to: 1. On completion of the required reading. In addition to the 39 hours of class contact. describe the elements of financial reports. On completion. decision-making and control 4. All answers to tutorial questions will appear on Blackboard. A specifically prepared unit guide is also available on Blackboard. shareholders. The topics listed in the week by week program will be covered in on campus lectures and tutorials. analyse and interpret financial reports and explain their use for decision-making 3. The total time commitment expected for this unit is 156 hours. The following new terminology will be used throughout this unit. financial maths. managers etc. general purpose financial reports. This unit should benefit students who wish to specialise in accounting. problem solving and presentation skills to individual and/or group activities dealing with introductory accounting. adjustments.1. apply critical thinking. cash and accrual accounting. Teaching and learning approach This unit is divided into 12 topics spread over a 13-week teaching period. Students should ensure answers are included in notes for each topic to assist with revision of the unit. together with time spent in general study. lenders. This includes time spent in preparing for and completing assessment tasks. and have the ability to analyse and interpret accounting information. Accounting standard changes occur each year. interpreting information (financial and non-financial) for managers to use in planning. understand how to make capital budgeting and investment decision using ‘Net Present Value’ 5. investment analysts. At Monash students are responsible for taking their own notes from the prescribed texts. financial statement analysis. Please acquaint yourself with the terms and use them correctly in your assignments. A week by week timetable has been provided to guide your study program and also to indicate assignment due dates and non-teaching periods. Important changes to terminology with new accounting standards Some of you may have acquired previous accounting knowledge and may be use to certain accounting terminology. and from 1 January 2005 Australia has adopted International Accounting Standards some with an Australian revision. 2 . students should attempt the set of tutorial and assignment questions. Unit Introduction Unit synopsis This unit is an introduction to basic concepts in accounting and the application of these concepts for decisionmaking by a wide range of potential users (e.. decision-making and control. and will also be of value to students whose primary interest lies elsewhere in the field of business. capital budgeting and investments. students should have a clear understanding of the accounting process and the language of accounting to enable communication with an accounting professional. This equates to 12 hours per week of which three are in class.g. understand the relevance of accounting information for informed decision-making by a wide range of potential users. and examination preparation. interpreting information for managers to use in planning. apply double entry recording and prepare basic financial reports 2. which are available via Blackboard.). Topics covered include the accounting equation.

Remember that as university students you are expected to be independent learners and this tool will enable you to develop the skills required for independent learning while working as a group. Assignments and Unit Outline can be downloaded and saved to your own computer. The academic staff would prefer students to use the bulletin board as a facility to answer each others’ questions rather than expect the academic staff to provide all the to promote student discussion. there is a link on your My Monash Portal page to download a viewer version of the software for free. The bulletin board is a tool to enable you to communicate with other students and discuss certain issues similar to the classroom Academic staff can also be contacted using the bulletin board.    3 . If you do not have a copy of PowerPoint. Operating Blackboard All the study materials for AFW1000 may be accessed online. Statement of financial performance Statement of financial position Intangibles Accounts payable Borrowings Issued capital. units on issue Revenue SAC 3 and SAC 4 Tutorial allocation New Terminology Income statement Balance sheet Intangible assets Payables Interest-bearing borrowings Contributed capital Income The framework All students must enrol themselves in a tutorial group using Allocate +: For information please go to: http://allocate. the academic staff will tend to be ‘lurkers’ and will answer email questions/discussions where students get on the wrong track or are covering a particularly difficult issue. across many campuses and even countries. these files can be accessed using Adobe Acrobat. which can be opened in any word processing package. The following briefly describes some of the information available on the site: The Unit Material — Unit The main communication tool for student use is the bulletin board.Previous Terminology Profit and loss statement. The unit provides weekly lecture notes that are usually saved as PowerPoint files. however. Please note that downloadable material is often saved as either a PDF file that can be opened in Adobe Acrobat (a viewer version of this software can be downloaded for free from your “My Monash Portal”) or as a rich text file. Some academic staff may prefer to save lecture files as PDF.

A. John Wiley. Nelson Australia Pty Ltd Horngren. You can also make personalised notations and use the calendar similar to a diary to highlight important personal dates that you have in the future. QLD. it can be obtained from: such as assignment due dates. G. Australia Check with your campus lecturer. Accounting (5th edition). Pearson Education. Brisbane. Thompson. C. & Hancock. It is the user name you will use to access the computer labs on campus and the online electronic databases in the Monash Library. K. Before you can access Blackboard you will need the following information: 1.. Financial accounting: An introduction (4th edition). the change will be processed as soon as possible and may take a couple of days to be reflected in Blackboard. Australia Financial accounting: An integrated approach (3rd edition). or if you find a useful one not on the list. Both academic staff and students can make entries on the calendar. Please feel free to place a notice on the bulletin board alerting other Your password for your Authcate username. or meeting dates for an online chat session. P. How can you get access to Blackboard? The site can be accessed under the “blackboard” tab in your My. If you have made a change to your enrolment. (2006). Q Manual The Q Manual is a student guide for producing quality work on time.pdf. Printed copies are available at the bookshops or online at: http://www.. If you do not know your Authcate 3. (2005). If you have forgotten your Authcate password. M. This can be obtained from the Monash Computer Centre if you do not have one. French Forest. Some of the introductory texts currently available from the library are listed below: The central university systems will automatically create a Blackboard account for you if the unit you have enrolled in has Blackboard support. A list of the units that you will be studying during the current 2. NSW. Resources and Requirements Unit requirements There are no prerequisites for AFW1000.Monash Portal at: https://my. & Ramsay.buseco. 2. (2009).edu. 4 . Milton. Principles of accounting and finance. Australia Trotman. M.T. Prescribed text(s) Carey. & Gibbins. Principles of Financial Accounting (1st edition). (2007). Another communication tool is the calendar. Australia NB: Available through the campus bookshops Other introductory accounting Text Books There are many other introductory accounting texts in the library which you can consult if you have difficulties understanding a particular topic. (2007). Your Authcate user name. Australia Peirson. The unit covers basic accounting concepts and assumes no background knowledge. et al. QLD. for other textbooks. John Wiley & Sons. it can be obtained from the following address: www. Pearson Education. Contemporary accounting (6th edition). et al. Note that not all of the units you are enrolled in will have a Blackboard site for you to access.. (2006).

monash. .au/cheq/evaluations/. The expectations are presented in the unit objectives and assessment criteria. or seen a CALT Learning Support staff member and identified as needing intensive tutor. Students are strongly encouraged to take note of.students may be provided with assignment feedback sheets that provide them with advice about seeking additional help to develop their writing (CALT) or research skills (library). or other support service personnel and have a signed referral form Attended a 15 minute drop-in session.Examinations – use of calculators Programmable calculators. Calculators MUST be identified with an “approved for use” label which can be obtained from the School of Business and Economics Student Feedback and Support Services Feedback to Students Students will receive feedback on work in the following ways: • • • individual feedback on assignments in class discussions problem solving in tutorials Feedback on work helps students understand the unit’s academic expectations and progress towards these expectations. . For details see URL: http://www. tutor. 5 . or other support service personnel Referred by lecturer. as well as their tutor’s and peers.students may be provided with opportunities to answer questions in lectures and tutorials – obtaining feedback on the understanding of key points. graphics calculators and calculators that have the capability to communicate with other devices are NOT permitted in tests and exams in the Faculty of Business and Economics.students may have set theory and practical work which are discussed in tutorials enabling them to gain feedback on their own perceptions. individual consultations are available for intensive work on approaches to study or English language skills for the following students: • • • • • Referred by Academic Progress Committee hearing Received an early warning letter Failed an assignment or unit and have a signed referral form from lecturer.students may also be regularly provided with verbal feedback on important issues to be noted from teaching and learning materials. . workshops and drop-in centres run by CALT Learning Support staff. including on-line/hard copy unit evaluations. Currently. with the feedback being given to the lecturers so that they can make improvements to their teaching methods. Two major surveys might be conducted each semester.adm. Feedback from Students At Monash formal feedback from students is sought via a variety of surveys. • Unit evaluation surveys enable students to provide feedback on features of units. the individual and class feedback.students may also be provided with model answers or feedback on their general performance on common tasks. Features include content. with a view to obtaining consistent and quality information. Student Support Students are able to access academic support provided by CALT (Centre for the Advancement of Learning and Teaching). All students are welcome to attend classes. . • The MonQueST questionnaire is structured to enable student feedback to be obtained on specific aspects of an individual’s teaching. In regards to the types of feedback on assessment: . workload. reference material and overall satisfaction of the unit. and act on. and to promote discussion and common understandings.

monash. is available at: 3.adm. 6 . All answers to tutorial questions will be available on Blackboard on the Friday of that week. Students are requested to come to tutorials with prepared answers to be discussed (see Tutorial Program). Program The lecture and tutorial program outlines the broad topics to be covered. including advice on Student Rights information about student support services.

P. P. P. (2009). (2009). P. Cash and Accrual Accounting and Statement of Cash Flows 3. Financing the Business UNIT REVISION SWOT VAC EXAMS BEGIN Carey. P. Financial Statement Analysis 7. General Purpose Accounting Reports 6. Chapter 3 Aug 10 Aug 17 Aug 24 Aug 31 Sept 7 Sept 14 Sept 21 Sept 28 Oct 5 Oct 12 Oct 19 Oct 26 Oct 2920 Nov 4. Chapter 1 Carey. (2009). Chapter 2 Carey. (2009). (2009). P. Chapter 9 Carey. Chapter 10 Carey. Chapter 7 Carey. (2009). Chapter 10 Carey. (2009). Introduction to Accounting 2. P. Concentrating on posting general Journal entries to the Ledger and Trial Balance Required Readings Carey. P. Chapter 11 7 . Chapter 8 Carey. P. (2009). P.Lecture program Date July 20 July 27 Aug 3 Topic 1. Chapter 4 Carey. Chapter 5 Carey. Chapter 6 Carey. (2009). The Recording Process. (2009). (2009). P. (2009). Cost Information for Internal Decision-Making 9. P. Adjusting the Accounts 5. Performance Measurement 8. Budgeting and the Behavioural Implication of Accounting Information 10 Introduction to finance and financial mathematics 1 NON-TEACHING WEEK 11 Financial mathematics 2 12.

3-5. General Purpose Accounting Reports Chapter 5: Questions 3. 18.11 Students should note that the lecture and tutorial programs outlined above are a guide to the material to be covered in this unit and not a definitive statement of when that material will be covered. 3. Brief Exercises: 1-1. 20. Concentrating on posting general Journal entries to the Ledger and Trial Balance Aug 17 4.1. Adjusting the Accounts Chapter 3: Questions 2.3. 28. Problems: 4.8 Problems: 5. Chapter 9: Questions 1.3. 5. 10. 1-4.15. Exercises: 5-4. 13. 3. Chapter 11: Questions 3.14.4 Exercises: 2-1. 12. 13. Problems: 2. 16. 8. 7. 15 Brief Exercises: 5-2. 4. 5.10. 1-7. and posted on Blackboard unit website. 10. 27. 15. 5. 48. 6-7 Problems: 6-1. 19. 4.17. 3. 2. 2. 7. Chapter 7: Questions 1. Financial Statement Analysis Chapter 6: Questions 2. 41. 2. 2. 13. Chapter 8: Questions 1. 10. 11-5 Problems: 11-8. 4-7 Exercises: 4-3. 23. 4-4. 3-9. 2009) No Work Preparation required Chapter 1: Questions 1. Exercises: 11-1. 17. 3. P.13. 24. 4. 9. Performance Measurement 8. 3. Chapter 10: Questions 37. Sept 7 Sept 14 Sept 21 Sept 28 Oct 5 Oct 12 Oct 19 7. 5. 16.8.1-10 Chapter 2: Questions 1. 50. 42. Brief Exercises: 3-2. 6. Cost Information for Internal DecisionMaking 9. 6. Introduction to Accounting Topic Required Preparation (Carey. 6-8 Exercises: 6-4. Financing the Business UNIT REVISION Chapter 10: Questions 1. 12. 8. 7. Brief Exercises: 4-3. 11 Brief Exercises: 6-1.Tutorial Program Date July 20 July 27 Aug 3 Orientation 1. 14. 8 .. Chapter 3: Problem 3. 7. 5. 1-3. 5.10 Exercises: 3-1. 11-2. Budgeting and the Behavioural Implication of Accounting Information NON-TEACHING WEEK 10 Introduction to finance and financial mathematics 1 11 Financial mathematics 2 12. 6. 7. 12. 6-2. Specific details relating to the timing will be discussed in lectures and tutorials.5.2. 3. 11. 25. 18.1. 49.6 Aug 24 5. 38. 3. Aug 31 6. 5-6.1 Aug 10 3. 43. 4. Brief Exercises: 2. Cash and Accrual Accounting and Statement of Cash Flows Chapter 4: Questions: 1. 3. 9.2. 3. The Recording Process. 3-8. 2-3. 5-5. 2. 6.

that piece of work will be marked again by a second examiner who will independently evaluate the work. 2009 before 5PM (Week 7) Value 15% Hurdle requirement Your final mark will be the sum of the marks gained in all pieces of assessment. See list of presentation topics below. Second marking Where a written work submitted for assessment is given a Fail grade by an examiner. Participation and preparation (5%) will be graded by tutors and communicated to students by tutors in week 13 Final Examination (Unit Objectives 1.buseco.html. and consult with the first marker. Assessment Assessment Summary Assessment Task Assignment 1 Requires application of materials covered in lectures Weeks 1-5 (Unit Objectives 1 and 2) Assignment 2 Requires application of materials covered in lectures Weeks 7-9 (Unit Objectives 3 and 4) Tutorial Participation & Presentations Student presentations (5%) will be graded by tutors for presentation from Week 2-13. No student will be awarded a Fail grade for an assessment task or unit without a second examiner confirming the result. 2. 9 .au/secretariat/policies/near-pass-fb-0507. except that to pass this unit you must achieve at least 50% in the final examination. 2009 before 5PM (Week 10) 15% Due Date Due Monday 7th Sept. Final marks and grades Faculty policy states that 'the final mark that a student receives for a unit will be determined by the Board of Examiners on the recommendation of the Chief Examiner taking into account all aspects of assessment'. unless the total of such pieces exceeds 30% of the final mark. Note: Exceptions to this are pieces of work contributing no more than 10% of the final mark. Where you achieve less than 40% in the final examination. and 4) Official Examination Period is between 29th October to 20th November 2009 60% Total 100% 10% Due Friday 2nd For more information on the NP policy please refer to the following link: See: http://www. your maximum final mark for the unit will be 43%. 3. Note: If your final mark is from 45% to 49% then the Board of Examiners may award a Near Pass (NP).edu. Where you achieve from 40% to 49% in the final examination your maximum final mark for the unit will be 45%.4.

7. In the event that this proves to be unsatisfactory they may approach the Chief Examiner for Return of Marked Assignments Marked assignments will be returned to students within 3 weeks. Instructions to students Students are required to retain a copy of their assignment(s) until results are In this day of technology all students should have computer access and are expected to make use of computers. 2. NO assignment will be accepted or marked if it is not accompanied by a signed Assignment cover sheet. You will receive your assignment cover sheets with your off campus be submitted in your respective campus drop-box provided Assignment 2: Oct. please trim tractor be submitted in your respective campus drop-box provided Applications for extension of time All applications for an extension of the time allocated to an assessment task must be made in writing to the Unit Leader on the appropriate Details The two Assignments have been specified in section 5 of this outline These tasks are for an individual No provision is made for students to resubmit work for higher 2009. Assignment Cover Sheets Work submitted for assessment must be accompanied by a completed copy of the Assignment cover sheet which has been signed by the student. Marking guide See the marking rubric (back page of the Unit Outline) as a guide for the awarding of grades throughout the Faculty.pdf Penalties for late lodgement A maximum penalty of 10 per cent of the mark allocated to this assessment task will be deducted for each day that the assessment is late. if granted. Faculty Style Guide Work submitted for this assessment must follow the Faculty Style as outlined in the Faculty Q Manual.buseco. Copies of this Manual can be obtained at the bookshop or on line at: http://www. 17:00 . You are advised to use computers when preparing the first assignment. will be in writing and will be recorded on the Faculty Assignment cover sheet accompanying the assessment task by the responsible lecturer/tutor. 17:00 . 2009. Approval. See http://www.buseco. Final Examination 10 . When using continuous feed Submission instructions Submission date and time Assignment 1: Sept. It is a student’s right to seek clarification of their assignment grade with their Lecturer or Tutor on campus.

au/student/exams/. More information regarding exam format will be available towards the end of the semester. closing dates. Examination Duration This will be a 3 hour examination. and attendance. Special Consideration A student whose work during a teaching Details regarding Return of Final Marks for the Unit The final mark for this unit will be released by the Board of Examiners on the date nominated in the Faculty Calendar. For more information please refer to URL: http://www. class presentation. Submitted work must therefore be a student's own work. those sources must be acknowledged in full. Collusion. The exam will contribute 60% of the final grade in the unit.Marks available will be marked out of 11 . assignment or final exam has been affected by illness or other serious cause may apply for special consideration.buseco. The examination timetable which provides full details of the examination schedule can be accessed through the my. Practice exam questions with solutions will be made available on the unit Blackboard for revision purposes towards the end of the semester. performance in a semester test. theory and practical questions.html. Collaboration. Examination date and location This examination will be held during the official examination period. supporting documentation requirements and an application form can be found at URL: Plagiarism and Cheating The submission of written work such as essays and assignments is an essential part of the learning process and a vital way of assessing students' understanding of an area of study. in quoting or paraphrasing material from other sources. Student results will be accessible through the my. The examination is closed book and will comprise a combination of multiple choice questions. This does not mean that students may not make use of the work of others.

Assignment 2 .buseco. & 9) Chapter 7: questions 5 & 16 Chapter 8: questions 3 & 6 Chapter 9: question 4 Faculty Style Guide Work submitted for this assessment must follow the Faculty Style as outlined in the Faculty Q Manual. 12 . Participation will be judged by the tutor based on participation in tutorial discussion (2. Students are required to answer the following questions from their textbook (chapters please contact your Lecturer in the week you enrol to receive your Students will be awarded a maximum of 5 marks by their tutor for participation (Contributing 5% to final grade). Assignment 1 integrates topics 1 to 5 of this unit. Timing.15% This is a task for each individual student. Each student’s assignment will contain a unique series of business transactions generated by a computer program. 8. Appropriate use of body language (inc. This assessment is designed to test your achievement of Objectives 1 and 2. eye contact). Assessment Details Assignment 1 . Ability to work as a team. with a record being kept of which numbered assignment you receive. Using the unique series of business transactions (data) students will be required to record the transactions through the general journal and general ledger.5 marks). Design and use of visual aids. To receive this email you must be officially enrolled in this unit before the end of Week 2.15% This is a task for each individual student. Each assignment is numbered. Marks will be awarded based on transaction processing. Audience interest and response. Fluency (speed.5 marks) and evidence that students have attempted tutorial problems before class (2. Students will be graded using a 5 point scale (1 = Low. closing entries. format and the presentation and accuracy of the financial statements. Presentation and Participation (ON-CAMPUS STUDENTS ONLY) – 10% Marks available Students will be required to complete one class presentation which contributes 5% toward the final grade in the subject. You will receive your assignment via email in Week 3 of the semester. If you are late to 5 = High) on the following criteria: Knowledge and understanding of content. financial statements and a worksheet.5. Copies of this Manual can be obtained at the bookshop or on line at: http://www. prepare balance day adjustments. This will require you to demonstrate your ability to prepare a 10 column worksheet and financial statements from a list of transactions entered into by a business using both manual and computerized accounting systems. volume and pronunciation).

Week 5: Balance Day Adjustments 13 . but they should be able to provide reasons for the difference and illustrate the difference using examples of items from the company they choose.html You should click on the 2008 year icon located on the left hand side of the page to access companies in that year. Compare the total net cash flow (Net increase/decrease in cash held) and the cash flow from operations and explain why these numbers For the company you 1. 2.ezproxy. Review the Directors Declaration and outline the responsibility of senior management in the issuing of financial statements. For the company you selected answer the following questions. What % total assets are funded by equity.e. Time allocated Students will have a ten minute time limit for their presentations (i. Presentations will be in groups of two students during tutorials in weeks 2 to 13 of semester. Read the audit report and describe the key responsibility of auditors in the conduct of a financial statement audit? 3.lib..htm l It is important for a business to generate sufficient cash flow from operations to ensure the company remains viable (solvent). Management engage auditors on behalf of shareholders to improve the quality of financial Technology requirements Students may present using an overhead projector (where available).connect4. find the annual report and after reading that report answer the following questions: 1. Explain the difference between profit and cash flow from Week 4: Cash Flow Select any company with a year ending 2008 from the ‘Annual Report Collection’ data base which can be accessed via the Monash University library at the following web address http://www. The primary objective of financial reports is to provide useful information to users for „decision making‟. Students will be informed of their participation grade in week 13 tutorial Presentation Topics Week 3: Financial Statements Select a company listed on the Australian Stock Exchange at 30 June 2008. Comment on the implication of your findings for the future of the Students are not required to present a reconciliation. Company data is available from the ‘Annual Report Collection’ data base which can be accessed via the Monash University library at the following web address http://www.connect4. 2. Instructions to students If you have a preference regarding a presentation partner. Net assets can be funded by either debt or equity. please form a group of two in advance and inform your tutor in week one Return of Marks Students will be given written feedback on their presentation in the week following the presentation. There will only be one presentation per tutorial each week. or the white time and location Presentation dates will be allocated by individual tutors. When there is a difference explain the long term implications for the 5 minutes for each student).

Explain how the concept of risk is related to the four characteristics of a financial transaction.stanford.ezproxy. Assets can be funded by debt. At the following URL is an elegant description and definition of what is finance by Professor Sharpe: http://www. and use the profit figure to assess their investment performance? What is the % increase/decrease in the net profit/loss from last year? What is the main source of revenue contributing to profit? Company data is available from the ‘Annual Report Collection’ data base which can be accessed via the Monash University library at the following URL: http://www. what are the implications for shareholders? 2.connect4. Contrast the accounting for the fraud with accounting for prepaid expenses. Page 333) Week 10: NO PRESENTATION Week 11: William F. Would you invest in this company and why? Week 7: Financial Statement Analysis (Ethics case) Problem BYP Required 1. Hint: Sharpe’s discussion on financial economics at the URL above should serve as a starting point in answering the questions above. Sharpe‟s greatest claim to fame? . Discuss a real life example of the risk-return trade-off in finance and state the specific type of risk that arises in your example. Week 12: 14 .au.4 (Carey 2009. What is William F.WorldCom was a large US telecommunications company. Sharpe is one of the most respected Financial Economists of all time.html . 5. explain why a monetary economy is superior to a barter economy and similarly. highight an example that differentiates an economic transaction from a financial transaction and discuss the four characteristics of the financial transaction. You should click on the 2008 year icon located on the left hand side of the page to access companies in that year. In your discussion. Which item made the largest impact on the statement of changes in owner’s equity? 4. Further research will deepen your understanding of the issues involved. With reference to the article by Kirchgaessner and Waters (2002) „Beaumont role under WorldCom spotlight‟. 2. Explain why the trading of money now for money in the future can be beneficial to an economy. describe how senior management at WorldCom managed to perpetrate the worlds largest financial statement fraud. If interest rate is falling but credit is scarce as in the current climate. Page 285) Week 9: Budgeting and responsibility accounting Question 5 (Carey 2009. Briefly describe the circumstances surrounding the collapse of WorldCom in 2002. What is the fundamental difference between traditional economics and financial economics? In your discussion. Explain the evolution of the economy from a barter economy to a monetary economy and finally to a financial economy. why a financial economy is superior to a monetary economy. 1.lib. For the company you select. Week 6: Financial Statements Select a company listed on the Australian Stock Exchange at 30 June 2008. Page 259) Week 8: Chapter 7 Question 7 (Carey 2009. find the annual report and after reading that report answer the following questions: 1. Shareholders are the main users of financial reports. 3. One of the fundamental principles in finance is that higher risk should be rewarded with a higher return. and the cost of debt is interest. Capital can increase/decrease in two ways: profit/loss and contribution/distribution.

as well as our enterprise solutions and software.000 $45. Required 1.000 $53.000 $50. 6.2 billion (USD 10.000 $56.000 NURSERY B -$250.000 $62. Gargorium is considering the expansion of two of its current nurseries. Based on the Form 20-F for 2007.6 billion) and net profit was EUR 7. games. What is a mutually exclusive project? Define the term Net Present Value (NPV). is a company that owns and operates nurseries. Which project should the company now choose and why? Show your workings. you can then use the financial maths skills you have developed to solve the numerical problems. video. business mobility and more. Obtain one of these texts to teach yourself about the NPV technique. 25] To answer the questions below.000 $58. Form 20-F 2007. The estimated initial cost of expanding the nurseries and the subsequent increase in cashflows from the expansion is tabulated below: YEAR 0 1 2 3 4 5 6 7 NURSERY A -$300. Recalculate the NPV for both projects using the optimistic discount rate. 4. what are the NPVs of expanding Nursery A and B? Show your workings. Required 1. Assuming a discount rate (interest rate) of 8% p. p.000 $47. At the end of 2007. Week 13: Nokia is the world leader in mobility. Which of the projects is more risky and why? 9.a. What is this special discount rate called? Hint: The Net Present Value (NPV) project evaluation technique is discussed in almost all standard corporate finance texts. What is the discount rate that sets the NPV of expanding Nursery A to zero? Show your workings.000 $55. we employed 112 262 people. imaging. solutions and services for communications through Nokia Siemens Networks. customer service and other operational units. 8. 3. television. our net sales totaled EUR 51.000 $57.Gargorium Ltd..1 billion (USD 74. The discount rate of 8% is the company’s best guess based on the assumed risk of the projects. sales in more than 150 countries.000 $54. We also provide equipment.000 $51.000 $52. For 2007. how has Nokia performed in recent times? Be sure to highlight 15 . Which nursery should the company expand and why? 7. is a key area of focus. 5.5 billion). What is the NPV decision rule? Draw a timeline that depicts the cashflows for expanding Nursery A.000 The company considers the expansion of either Nursery A or B to be mutually exclusive. and a global network of sales. download Nokia‟s Form 20-F for 2007 from the web. The company’s optimistic estimate of the discount rate is 6%. [Nokia Corporation. had production facilities for mobile devices and network infrastructure around the world. Developing and growing our offering of consumer Internet services.000 $60. navigation. 2. Once you understand the specifics of the NPV technique. We make a wide range of mobile devices with services and software that enable people to experience music.000 $49. driving the transformation and growth of the converging Internet and communications industries.

html and for students enrolled prior to 2008 http://www. or flair. will be given a Near Pass (NP) in that unit provided that they have completed all the work for the including the quality of their academic English and approaches to 16 . interpretation and presentation Strong evidence of independent reading beyond core texts and materials Demonstrates insight. awareness and understanding of deeper and more subtle aspects of the topic. 2. refer to the following: links: Nokia spends a considerable amount of money (about EUR 3 billion annually) on research and development. 4. Analyse and comment on Nokia’s financing situation in the 2006-2007 period. Source: University of Adelaide 2005 Near Pass: From 2008. identify the source of this Inaccurate and inconsistent acknowledgement of sources.buseco. Accurate and consistent acknowledgement of sources. which is confirmed to be the last unit necessary to complete a course of study. Is the trend in the share price of Nokia consistent with the evidence in the Form 20-F? If students enrolled in undergraduate courses managed by the Faculty of Business and Economics who fail a unit with a mark between 45% and 49%. For further information. Using key information from the balance sheet and data provided in the business insight in Chapter 11 of your prescribed text. Demonstrates originality and independent thought Highly developed analytical and evaluative skills Ability to solve very challenging problems Highly developed skills in expression and The Monash University Library provides services and resources to Monash students who want to improve their academic learning skills. Very little evidence of analytical and evaluative skills Adequate problem-solving Very little evidence of skills problem-solving skills Adequate skills in expression and presentation Inadequate skills in expression and presentation. and have sat the final examination. obtain the share price history of Nokia for the past two years. Well-reasoned argument based on broad evidence Sound argument based on evidence Very little evidence of ability to construct coherent argument Analytical and evaluative skills Problem solving Expression and presentation appropriate to the discipline Evidence of originality and independent thought Clear evidence of Evidence of analytical and Some evidence of analytical and evaluative evaluative skills analytical and evaluative skills skills Ability to solve non-routine Ability to use and apply problems fundamental concepts and skills Well developed skills in expression and presentation. Assignment and Examination Assessment Criteria Grading descriptors High Distinction (80%+) General description Outstanding or exceptional work in terms of understanding. are there any external factors that 3. Good skills in expression and presentation.buseco. Using the web. you can think of that could have affected Nokia’s share price? In order to stay at the forefront of the mobile communications evidence you have used to reach your conclusion. Ability to consider topic in the broader context of the discipline Distinction (70 – 79%) A very high standard of work which demonstrates originality and insight Credit (60 – 69%) Pass (50 – 59%) Fail (Less than 50%) Fails to satisfy the minimum requirements Demonstrates a high level Satisfies the minimum of understanding and requirements presentation and a degree of originality and insight Thorough understanding Evidence of having read of core texts and materials core texts and materials Reading Evidence of reading beyond core texts and materials Evidence of an awareness and understanding of deeper and more subtle aspects of the topic Very little evidence of having read any of the core texts and materials Scant knowledge of principles and concepts Knowledge of topic Sound knowledge of principles and concepts Knowledge of principles and concepts at least adequate to communicate intelligently in the topic and to serve as a basis for further study Articulation of argument Demonstrates imagination Evidence of imagination or flair. and academic essay. reading. housing advice and health and medical Further information on learning skills services can be found at: Drop-in sessions. psychological. A longer appointment may be scheduled for a later date if deemed necessary by the learning skills effective listening and notetaking in lectures and seminars. classes and workshops are scheduled throughout the semester. educational. financial. To access the online resources visit: http://www. 17 . financial aid. study and exam preparation. off-campus learners and students with a disability. analysis.html. report and thesis writing. Wellbeing and Development is a branch of the Student and Staff Services Division offering services to students and staff in the areas of chaplaincy. family and child care religious/ Online learning support resources are also available for higher degree research students. health. Assistance is offered in such areas as oral communication and presentation. Health. Health. You can come to a library drop-in session for a brief 10 to 15 minute consultation with a learning skills adviser about your assignment or academic skills. at the undergraduate and postgraduate levels. Wellbeing and Development contributes to the university's goals by providing support and advice to students and staff on emotional.lib. child care and physical problems in order to enhance their academic performance and the university community problem solving and critical thinking. accommodation. http://adm.

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