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Faculty of Creative Industries and ICT
ASSIGNMENT TWO
Part A (30 marks) –
Theory Research 1st
Semester 2022
Subject Name: Financial Management for the Hospitality Industry
Subject Code: HM201
Semeste
Year 1/2021
Points: 6
Lecturer: David Supangco
Assignment Topic(s) Research: The CFO: knowledge, duties and
esponsibilities.
Total Marks 30
Word Count 2000 words
Team or Individual Team (maximum of 3 members)
Due Date: Week 12
Textbook and journals A minimum of five references.
How to submit Only one MS Word document is to be submitted on the link
provided for assignment 2 on student web Moodle.
Part A: This part is worth 30 marks:
Undertake an-in-depth research and discuss the duties, responsibilities and professional knowledge
that a contemporary Chief Financial Officer (CFO) will need to succeed in his role.
As part of the assignment discuss two major challenges the CFO faces when investing in long term
assets and strategies used to curtail the problems.
Furthermore, it is critical in the final part of the essay to state the CFO’s fiduciary duties and ethical
esponsibilities that must be adhered to.
Requirement:
In this essay, you are required to undertake online research to be able to complete this assignment.
Internet websites must be either academic, registered professional associations and or government.
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Faculty of Creative Industries and ICT
Assignment
2 Part A
(30 marks
out of 40
Total marks)
GRADING
CRITERIA
Excellent
Good
Satisfactory
Poor
Fail
5%
General Description Outstanding or
exceptional work in
terms of
understanding,
interpretation and
presentation (5
marks)
A very high
standard of
work which
demonstrates
originality and
insight (4
marks)
Demonstrates a
high level of
understanding and
presentation and a
degree of originality
and
Insight (3 marks)
Satisfies the
minimum
equirements (2
marks)
Fails to satisfy
the minimum
equirements (0-
1 mark)
5%
Reading Strong evidence of
independent
eading beyond
core texts and
materials (5 marks)
Evidence of
eading beyond
core texts and
materials (4
marks)
Thorough
understanding of core
texts and materials (3
marks)
Evidence of
having read
core texts and
materials (2
marks)
Very little
evidence of
having read any
of the core texts
and materials
(0-1 mark)
5%
Knowledge of
Topic
Demonstrates
insight, awareness
and understanding of
deeper and more
subtle aspects of
the topic. Ability to
consider topic in the
oader context of
the
discipline (5 marks)
Evidence of an
awareness and
understanding
of deeper and
more subtle
aspects of the
topic (4 marks)
Sound knowledge of
principles and
concepts (3 marks)
Knowledge
of principles
and
concepts at
least
adequate to
communicat
e intelligently
in the topic
and to serve
as a basis
for further
study (2 marks)
Scant knowledge
of principles and
concepts (0-1
mark)
5%
Articulation of
Argument
Demonstrates
imagination or
flair.
Demonstrates
originality and
independent
thought (5 marks)
Evidence of
imagination or
flair.
Evidence of
originality and
independent
thought (4
marks)
Well-reasoned
argument based on
oad evidence (3
marks)
Sound
argument based
on evidence (2
marks)
Very little
evidence of
ability to
construct
coherent
argument (0-1
mark)
10%
Analytical
and
Evaluative
Skills
Highly developed
analytical and
evaluative skills (9-10
marks)
Clear
evidence of
analytical
and
evaluative
Skills (7-8
marks)
Evidence of
analytical and
evaluative skills (5-6
marks)
Some
evidence of
analytical
and
evaluative
skills (3-4
marks)
Very little
evidence of
analytical and
evaluative skills
(0-2 marks)
ASSIGNMENT TWO
Part A: This part is worth 30 marks:
ASSIGNMENT TWO
Part B – Theory Application
1st Semester 2022
Subject Name: Financial Management for the Hospitality Industry
Subject Code: HM201
Semeste
Year 1/2022
Points: 6
Assignment Topic(s)
Part Two (20 Marks)
Capital Investment decision, forecasting cashflow and
elated report.
Total Marks 10
Word Count 500 words
Team or Individual Team (maximum of 3 members)
Due Date: Week 12
Textbook and journals A minimum of five references.
How to submit Only one MS Word/Excell document is to be submitted on
the link provided for assignment 2b on student web Moodle.
Part Two: This part is for the other 10 marks of the assignment:
Instructions for Students:
It is critical that you will first solve the capital investment question (Q.1) by hand using pen,
paper and a calculator. Then copy your answer and findings to the main report in an MS
word document. To obtain full marks, the answer needs to be clear and show all workings.
For the Forecast question use MS Excel but make sure that your Excel results are copied back on
to your main report in MS Word file. Use references from textbooks and journals.
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Q1: Capital Investments Decisions
The The Best Hotel Ltd
555 Five Street
Melbourne, Vic 3000
Ms Esme Sweet
Director of Finance
Ms Esme Sweet and her team have to undertake an investment analysis of two projects that will
determine the success of the hotel in the next seven years. The project, she and her team must
carefully evaluate, analyse and choose a high tech-kitchen that will take the hotel to the next level
in low labour costs, fuel efficiency, profitability and competitiveness.
Capital Investment Project
Project alternative 01
Seed Industrial Kitchens P/L
Code B248A
Project alternative 02
Plant Industrial Kitchens P/L Capital
Investment Project
Code C21B6
Projects Alternative 01 Alternative 02
Investment: $3,300,000 $3,900,000
The interest rates these projects are based 0n: 8% per annum (6% cost of capital and 2%
company hurdle rate). Projected cash-inflows for both projects after all projected expenses,
dividends paid and company tax.
Year B248A C21B6
1 $580,652 $680,652
2 $600,645 $700,645
3 $648,000 $748,000
4 $678,000 $798,000
5 $690,000 $820,000
6 $700,000 $901,000
7 $710,000 $919,050
Requirements for Q.1
a) Using the Payback Period method (PBP), in which time period under both alternatives,
will Ms J Hue have recovered the initial investment?
) Using the Accounting Rate of Return (ARR) which alternative will have the highest
ate of return?
c) Using the Net Present Value set at 10% (8% cost of capital and 2% company hurdle
ate) would either alternative be a good investment?
d) What is the Internal Rate of Return (IRR) for both alternatives? What does the IRR
shows us/means?
e) What is the Profitability Index (PI)? What does the Profitability measure and why it is
an important tool to use?
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f) Having all the data information in front of you and on your desk, as an educated
manage
usiness person which investment would you choose in the final analysis? And why?
You will need to thoroughly make a case argument based on the metrics you have
undertaken on each investment model highlighting their advantages and disadvantages to
present to the Board of Directors.
Marks 5
Q2: Forecasting Future Cash Flows for the Zelma Hotel.
The Rooms’ Division Manager for a five-star hotel [Zelma Hotel] with 400 rooms
has the responsibility of preparing the budget for the next quarter:
XXXXXXXXXXPrepare an excel spreadsheet model:
Month Average Occupancy Rate
October-17 86%
November-17 85%
December-17 95%
a) Average room rate:
a. October $379
. November $450
c. December $429
) Variable cost per occupied room: $37 for October and November and $40 for
December.
c) Labour cost per room is projected to be 17% of total revenue per month.
d) Annual fixed cost is set at: $1,120,000.
What is the estimated sales revenue and net revenue after total expenses for the year
using the monthly schedule outline?
Food and Beverage Department
a) Each room on average has two guests.
) On average, it is calculated that 81% for October, 87% for November and
93% for December have
eakfast.
c) On average
eakfast revenue per customer is $30 for each month except December
$33.
d) The food and beverage cost is set at 17% except for December where it is
projected to be 18%.
e) The wages cost full time staff is set at is set at 25% of the total revenue
[this cost included payroll cost and other related State taxes and insurance.]
f) Fixed cost is set to be: