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Page 1 of 6 School of Property, Construction & Project Management — BUSM4617 Project Financial Management and Appraisal Assessment 1 Assessment Type: Report [Individual] Word limit: 2000 (+/– 10%) Due date: Sunday of Week 3 11.59PM (AEST) Length: 2000 words Weighting: 30% Overview 1. Discuss the key differences between corporate finance and project finance approach to fund capital projects. In your discussion, explain the advantages and disadvantages of project finance over corporate finance in funding capital projects. 2. Explain why Debt is cheaper than Equity. Since debt is cheaper, should firms have 100% debt and no equity? Is there an optimal capital structure that gives the lowest cost of capital? Discuss. 3. A portfolio is a grouping of financial assets such as stocks, bonds and cash. Prudence suggests that investors should construct an investment portfolio in accordance with risk tolerance and investing objectives. Discuss the followings in relation to portfolio and risks: a. How is the riskiness of a portfolio measured? b. What would happen if we added more and more assets to the portfolio? c. If we added enough assets to a portfolio, can we eliminate risk? Please view the grading rubric Assessment declaration: When you submit work electronically, you agree to the Assessment declaration (Links to an external site.) (Links to an external site.). https://rmit.instructure.com/courses/35251/files/3358075/download?verifier=bQzi9JLMwpaE26VYFVNt2pl3IuB4L0K10oVuU349&wrap=1 https://www.rmit.edu.au/students/student-essentials/assessment-and-exams/assessment/assessment-declaration https://www.rmit.edu.au/students/student-essentials/assessment-and-exams/assessment/assessment-declaration https://rmit.instructure.com/courses/35251/files/3358075/download?verifier=bQzi9JLMwpaE26VYFVNt2pl3IuB4L0K10oVuU349&wrap=1 Page 2 of 6 Learning Outcomes Determine and apply knowledge of complex project management theory, principles and best practice to applied projects to contribute to the profession and discipline of project management Critically analyse, synthesise and reflect on project management theory and recent developments, both local and international, to extend and challenge knowledge and practice Professionally communicate and justify project scope, design, implementation, strategy and/or outcomes, engaging effectively with diverse stakeholders across a range of industry sectors Academic integrity and plagiarism Academic integrity is about honest presentation of your academic work. It means acknowledging the work of others while developing your own insights, knowledge and ideas. You should take extreme care that you have: Acknowledged words, data, diagrams, models, frameworks and/or ideas of others you have quoted (i.e. directly copied), summarised, paraphrased, discussed or mentioned in your assessment through the appropriate referencing methods, Provided a reference list of the publication details so your reader can locate the source if necessary. This includes material taken from Internet sites. If you do not acknowledge the sources of your material, you may be accused of plagiarism because you have passed off the work and ideas of another person without appropriate referencing, as if they were your own. RMIT University treats plagiarism as a very serious offence constituting misconduct. Plagiarism covers a variety of inappropriate behaviours, including: Failure to properly document a source Copyright material from the internet or databases Collusion between students For further information on our policies and procedures, please refer to the University website. Referencing guidelines You must acknowledge all the courses of information you have used in your assessments. Refer to the RMIT Easy Cite referencing tool to see examples and tips on how to reference in the appropriated style. You can also refer to the library referencing page for more tools such as EndNote, referencing tutorials and referencing guides for printing. Submission format Upload as one single file via the assignments submission page within Canvas. Use RMIT Harvard referencing style for this assessment. https://www.rmit.edu.au/students/student-essentials/rights-and-responsibilities/academic-integrity http://www.lib.rmit.edu.au/easy-cite/ http://www1.rmit.edu.au/library/referencing http://www1.rmit.edu.au/library/referencing Page 3 of 6 Assessment declaration When you submit work electronically, you agree to the assessment declaration. Working as a group Many courses require you to work in a group to complete various assessments. It is the collective responsibility of all group members to actively contribute and complete any project. If any individual is unavailable during this time, the group will need to adjust responsibilities to allow for the work to be completed. It is recommended that students elect a group leader to take responsibility for this. Working in a group requires consistent interaction and communication. This should be done within Canvas, Google Hangouts, email etc. Should any individual be unavailable for an extended period of time, it is the responsibility of the group members, or group leader, to advise their tutor to discuss the situation. This should be raised as early as possible if students wish to apply for an extension or special consideration. Only one copy of a group assessment needs to be submitted, however all group names must be added to the report submission. For further information about understanding group work, visit RMIT Learning Lab. Assessment Criteria https://www.rmit.edu.au/students/student-essentials/assessment-and-exams/assessment/assessment-declaration https://emedia.rmit.edu.au/learninglab/content/understanding-group-work Page 4 of 6 Criteria Ratings Pts Question 1 1. Discuss the key differences between corporate finance and project finance 2. Describe the advantages and disadvantages of project financing over corporate financing 3. Writing Structure, Technique, Argument construction HD • Discuss clearly and comprehensively most of the differences between corporate finance and project finance l • clearly and comprehensively discussed all the advantages and disadvantages of project finance over corporate finance for capital intensive projects • Exceptional writing structure and flow between sections. • Excellent grammar, syntax and referencing; few errors • High standard of writing with well- developed complex argument and fully integrated graphical and textual submission D • Discuss clearly most of the differences between corporate finance and project finance • clearly discussed most of the advantages and disadvantages of project finance over corporate finance for capital intensive projects • Very competent writing structure and flow within & between sections. • Very good grammar, syntax and referencing. • Majority of claims well supported by evidence CR • Discuss most of the differences between corporate finance and project finance • discussed most of the advantages and disadvantages of project finance over corporate finance for capital intensive projects • Competent writing structure and flow within & between sections. • Good grammar, syntax and referencing. • Clear logic of assumptions, claims and evidence PA • Provided some discussion of the differences between corporate finance and project finance • provided some discussion on the advantages and disadvantages of project finance over corporate finance for capital intensive projects • Satisfactory writing structure and flow within sections. • Limited grammatical and syntax and referencing errors • Satisfactory logic of assumptions and claims NN • Limited discussion of the differences between corporate finance and project finance • provided limited discussions on the advantages and disadvantages of project finance over corporate finance for capital intensive projects • Unsatisfactory writing structure and flow between sections. • Unacceptable grammar, syntax and referencing • Lack of logical development of argument 10.0 to >8.0 pts 8.0 to >7.0 pts 7.0 to >6.0 pts 6.0 to >5.0 pts 5.0 to >0 pts 10 pts Page 5 of 6 Question 2 1. Explain why Debt is cheaper than Equity. 2. Describe and explain the optimal capital structure 3. Writing Structure, Technique, Argument construction HD • Clearly and comprehensively explain most of the reasons why Debt is cheaper than Equity • succinctly explained and comprehensively described the optimal capital structure • Exceptional writing structure and flow between sections. • Excellent grammar, syntax and referencing; few errors • High standard of writing with well- developed complex argument and fully integrated graphical and textual submission D • Clearly explain most of the reasons why Debt is cheaper than Equity • clearly explained and described the optimal capital structure • Very competent writing structure and flow within & between sections. • Very good grammar, syntax and referencing. • Majority of claims well supported by evidence CR • Explain most of the reasons why Debt is cheaper than Equity • described and explained the optimal capital structure • described and explained the optimal capital structure • Competent writing structure and flow within & between sections. • Good grammar, syntax and referencing. • Clear logic of assumptions, claims and evidence PA • Some explanation of why Debt is cheaper than Equity • provided some descriptions of the optimal capital structure • Satisfactory writing structure and flow within sections. • Limited grammatical and syntax and referencing errors • Satisfactory logic of assumptions and claims NN • Limited explanation of why Debt is cheaper than Equity • limited descriptions of the optimal capital structure • Unsatisfactory writing structure and flow between sections