BUSS 23001 Principles of Financial Investment

Task B (90 Marks)
Mr. Sultan is a High-Net-Worth-Individual based in Salalah. He hails from a traditional business family. He is preparing himself to start a new business and wishes to understand Financial markets and the nuances of financial investment. So, he has approached you to support him on the following aspects,
1. Prepare a detailed report which will help Mr. Sultan to understand about the Functions of Financial market (FIVE functions) and types of Financial markets including stock market. (20 marks)
2. Mr. Sultan seeks clarity from you regarding what should be the priority of the new business that he is likely to start, creating wealth or maximizing profit. Prepare a report which will help Mr. Sultan to decide. (10 marks)
3. Also write a note by differentiating between Financing decision and Investment decision that will help Mr. Sultan to recognize the importance of decision making in finance. (10 marks)
4. Prepare a note that will help Mr. Sultan comprehend about role of ‘Time value of Money’ in financial decision making. (10 marks)

BUSS 23001 Principles of Financial Investment

5. Mr. Sultan has presented the following details to you about his project cash inflows and outflows and he has asked to you help in his decision making whether he should invest in this project or not. (40 marks)
• Initial investment is OMR 200,000
• Cash inflows are as follows,
Year 1          Year 2          Year 3           Year 4
60,000      70,000         60,000          70,000
• Cost of capital 12%
• Mr. Sultan wants to recover the Initial investment within 3 years or less.

A. Calculate Pay-back period. (2 marks)
B. Calculate Discounted Pay-back period. (3 marks)
C. Calculate Net Present value. (3 marks)
D. Calculate Profitability Index. (2 marks)
E. Calculate Internal Rate of return (5 marks)
F. Calculate Modified Internal Rate of return (5 marks)
G. Recommendations based on each technique. (5 marks)
H. Discuss about each of the technique used above by highlighting TWO features for each technique used for calculations and the discussion must be appropriately cited and referenced from relevant academic literature sources. (15 marks)