Critical understanding of the key strategic decisions that a business may have to make and appreciation of how accounting: Strategic Corporate Finance Assignment, MMU, Malaysia

Knowledge

K1. Critical understanding of the key strategic decisions that a business may have to make and appreciation of how accounting and finance can assist in making and evaluating those decisions.

K2. Critical understanding of specific analytical skills in key decision areas within strategy and finance at local and international levels.

K3. Critical understanding of the limitations of the current state of financial theory in making strategic business decisions.

Skills

S1. Competence in applying the key valuation concepts and methodologies of financial decision making to contribute to the wider decision making of the organization

Background   :

Jackson and Jackson Plc (J&J henceforth) is a UK based large consumer health company that designs and produces various medical and diagnostic devices for over-the-counter use.

Proposed Investment   :

J&J will invest 2 billion Philippine pesos (henceforth pesos) to set up the manufacturing plant. Capital allowances need to be applied to the initial investment on a straight-line basis at the rate of 20% per year. The Philippine government kindly agreed to provide a 5-year loan of 100 million Pesos to J&J to cover the initial working capital at a very low-interest rate of 2% per year.

Case – 1   :

Aragon plc is an online pet-food business that is currently operating in the United Kingdom and has been hugely successful in the last three years. Aragon plc is considering expanding its business in Europe and Japan by merging/acquiring local pet-food businesses. To finance this expansion, Aragon would require an investment of £22.50 million. Currently, Aragon has 8 million ordinary shares and has not issued any new shares in the period under review. The company is financed entirely by equity and its current market capitalization is £96 million.

Answer

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