Tasmanian Motor Rental (TMR) is set up as a proprietary

Semester 1, 2019BFA107 – FINANCIAL MANAGEMENT College of Business and EconomicBFA107 FINANCIAL MANAGEMENTSemester 2, 2018Assessment 2: Written assignmentAssessment: 15%Description:Your assignment involves preparing a written report where you will present an analysis of financialinformation relating to a capital investment project described in the attached case study and providerecommendations that will assist the firm in its decision making.Length:1,500 words maximum – this requirement refers to the written analysis section of the assignment only and isa “maximum”. Students will not be penalised for using fewer words and making their report more succinct.If you submit over-length work, there will be an automatic 10% penalty of the total possible marks for thisassessment. Title pages, calculations section, reference lists and appendices are included in the word count.Assessment criteria:Please see the assessment rubric uploaded on MyLo under assessment 2 folder for information on theassessment criteria which will be applied when marking the assignment.Percentage weighting: This assignment is worth 15%the final mark for the unitDue date: Saturday, 18 May 2019 by 5pmSubmission instructions:Assignment are to be submitted through the assignment submission folder on the unit’s MyLo site. Therewill be no paper submission. You may only submit your assignment once. A signed assignment coversheetshould be downloaded from the assignment folder on MyLo and must be submitted. Assignments without acoversheet will not be marked. The date stamp on the electronic submission will determine if your assignmenthas been submitted on time. Late work will be penalised unless you have been granted an extension by theunit coordinator.This is an individual assignment. Under no circumstances should you share your workings or any part of yourassignment with other students – this constitutes academic misconduct and actions will be taken. Allsimilarity report on Turnitin will be thoroughly checked for matching with external sources and with otherBFA107 assignments. You are asked not to discuss the assignment with other students on MyLo. You mayask general questions on MyLo if there is something you need clarified but you should not discuss anycalculations or where you have found any relevant information with other students.Submitted electronic files must be named as follows:? For Hobart students: HD_Student’s ID_Last name (Ex: HB_123456_Smith)? For Launceston students: LC_Student’s ID_Last name? For Cradle Coast students: CC_Student’s ID_Last name? For Distance students: DS_Student’s ID_Last nameSemester 1, 2019CASE STUDYTasmanian Motor Rental (TMR) is set up as a proprietary company in car rental industry and is consideringwhether to enter the discount rental car market in Tasmania. This project would involve the purchase of 100used late model, mid-sized cars at the average price of $15,000. In order to reduce their insurance costs, TMRwill have a LoJack Stolen Vehicle Recovery System installed in each car at a cost of $1,500 per vehicle. Therental car operation projected by TMR will have two locations: one near Hobart airport and the other nearLaunceston airport. At each location, TMR owns an abandoned lot and building where it could storeits vehicles. If TMR does not undertake the project, the lots can be leased to an auto-repair company for$90,000 per year (Total amount for both lots). The $25,000 annual maintenance cost (total for both lots)will be paid by TMR whether the lots are leased or used for this project. This discount rental car business isexpected to result in a fall in its regular car rental business by $20,000 per year.For taxation purposes, the useful life of the cars is determined to be five years and they will be depreciatedusing the straight-line depreciation method over 5 years with no residual values at the end. It is assumed thatthe cars will first be used at the beginning of the next financial year: 1 July 2019.Before starting this new operation, TMR will need to redevelop and renovate the buildings at each airportlocations. This is expected to cost $215,000 for both locations. Assume that TMR is not able to claim anyannual tax deduction for the capital expenditure to the renovation of the building until the business is sold.TMR has also budgeted marking costs what will be spent prior the start of operation, during the first twoyears of operation. The estimated costs are $30,000 per year. These costs are fully tax deductible in the yearthey are incurred. In addition, if the project is undertaken, a total new injection of $150,000 in net workingcapital will be required. There will be no additional working capital required from the commencement of theoperation until the end of the project. The initial networking capital will be recovered in full by the end ofyear 5.