EFB210: Fundamentals of Finance, Semester 1 2022

Buy ready-to-submit essays. No Plagiarism Guarantee

Note: Every paper is crafted by human writers to ensure authenticity and originality.

EFB210: Fundamentals of Finance, Semester 1 2022

Capital Budgeting Report and Analysis

___________________________________________________________________________________ General Information

Marks:	25
Weight:	25%
Format:	Report and Analysis
Due:	5 June 2022 (end of day, 11:59pm)
Submission:	Submit report and Excel analysis files by uploading your files to the Fundamentals of Finance Assignment portal in Blackboard. Note that when saving and submitting the report and analysis files, please ensure that: You upload the correct files and that the files are not corrupted in any way. As markers, we can only mark what is provided to us at the time of submission.   Each filename must include the unit code, year and semester, your name and student number, and the file extensions must be either .docx (report) or .xlsx (analysis).

• For example, if Brad Pitt was studying Fundamentals of Finance, and his student number was 1234567 then he would save his report and analysis as: 

▪          EFB210 Assignment 2022 1 Brad Pitt 1234567 Report.docx  ▪    EFB210 Assignment 2022 1 Brad Pitt 1234567 Analysis.xlsx

• Please note that file types that cannot be opened in Word or Excel, e.g. .numbers files, are not accepted.

• Part of the assignment’s CRA relates to correct filenames.

__________________________________________________________________________________ Background Information^[1]

Blue Mountain Mining Ltd is evaluating its proposed iron ore mine for the Pilbara region of West Australia. The mine’s primary operations are the extraction of iron ore and its transportation to port. Given that the mine is 240 kilometres to the nearest port, ore will be transported using three (3) heavy haul trains where each train comprises two (2) locomotives and 208 ore carriages. It is anticipated that it will take one day for each train to complete the return trip from the mine to the port, including loading and unloading. 

As part of the investment proposal, Blue Mountain Mining is considering whether it should invest in autonomous trains (do not require drivers). The key advantages of autonomous trains over standard non-autonomous trains (require drivers) include:

• Reduced wages expense as there are no train drivers
• Reduced fuel and maintenance costs as the autonomous system operates trains more efficiently. 

However, disadvantages include:

• Additional capital outlay on rail line and trains 
• Requires additional technicians trained in autonomous technologies for rail line and train maintenance.

The company has provided detailed information related to the autonomous and non-autonomous options in the ‘Train Information’ spreadsheet. 

Task

The management of Blue Mountain Mining Ltd have requested that you provide a detailed financial analysis of each train option and prepare a report that recommends a preferred option. The following requests have been made about the analysis and report:

• The financial analysis is to be completed in Excel. The file is to be easily adjustable for different scenarios and all inputs must be in the one sheet called ‘Assumptions’ with the analysis of each train type conducted on a separate sheet.
• The report is to be short and concise (800 words + 20% tolerance) and written in a manner that can be understood by a person with a basic understanding of financial analytical tools.
• The report sections to include are Summary, Methodology, Recommendations and Limitations.
  • Summary: outlines the task and advises of the recommendation. o Methodology: must explain and justify the methodology employed.
  • Recommendations: recommends a preferred option. In addition, includes analysis on the sensitivity of the decision to the discount rate using the excel data table function (e.g., try between 5% and 15%).
  • Limitations: must identify key assumptions and limitations with the analysis.

---

[1] Disclaimer: This case study is stylised example designed to provide a realistic capital budgeting setting. Please note that information presented here is fictitious and may not necessarily reflect the actual reality of the problem.