Royal Commission into Misconduct in the Banking - Accounting and Finance Assignment Help

Assignment Task:

Task:

QUESTION 1 

(LO1) Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry There have been allegations against the financial services firm IOOF Holdings (ASX: IFL) of misrepresentation, misconduct, some corrupt practices including failing to act in the best interests of superannuation members. i) Research and identify major ethical allegations against IOOF. (8 marks) ii) Discuss corporate governance and common good implications of business malpractices allegedly perpetrated by IOOF. (8 marks) iii) Summarise the lessons learned and not to be repeated experience from the findings of the Royal Commission. (4 marks) Select helpful sites and resources. https://www.ioof.com.au/about-us/about-ioof https://www.ioof.com.au/__data/assets/pdf_file/0016/282202/IOOF-Code-ofConduct-Brochure-2020.pdf https://www.google.com/search?client=firefox-bd&biw=1920&bih=966&ei=JIkbYOemJ9vjz7sP5Zyl0AM&q=IOOF+%2B+royal+comm ission&oq=IOOF+%2B+royal+commission&gs_lcp=CgZwc3ktYWIQAzIGCAAQFhAe MgYIABAWEB4yBggAEBYQHjoICAAQsAMQzQI6CAgAEAgQDRAeUJ4eWKA4YOI 7aAFwAHgCgAHOA4gBwCSSAQkwLjUuNS40LjOYAQCgAQGqAQdnd3Mtd2l6yAE DwAEB&sclient=psyab&ved=0ahUKEwjnyI3Lws_uAhXb8XMBHWVOCTo4ChDh1QMIDA&uact=5 https://www.australianethical.com.au/personal/ethical-investing/ourapproach/australian-ethical-charter/ https://www.apra.gov.au/news-and-publications/apra-takes-action-against-ioof-forfailing-to-act-best-interests-of

QUESTION 2 (20 marks) (LO4) Hi-Five Limited is a sports equipment manufacturer and has a machine currently in use that was originally purchased three years ago for $120,000. The firm depreciates the machine using the straight-line depreciation method based on a five-year useful life. The present machine will last for the next five years or, once removal and cleanup costs are taken into account, it could be sold now for $70,000. Hi-Five can buy a new machine today for a net price of $145,000 plus $15,000 for installation costs. The proposed machine will be depreciated using a five-year straight line depreciation period. If the firm acquires the new machine, its working capital will change as follows: Inventory will increase by $15,000, accounts receivable will increase by $19,000 and accounts payable will increase by $16,000. Earnings before interest, taxes and depreciation (EBITDA) for the present machine is forecasted to be $95,000 for each of the next five years. For the proposed machine, the expected EBITDA for each of the next five years is: $105,000, $110,000, $120,000, $120,000 and $120,000, respectively. The corporate tax rate for the firm is 30%. Hi-Five expects to be able to liquidate the proposed machine at the end of its five-year usable life for $24,000 (after paying clean-up and removal costs). The present machine is expected to net $8,000 on liquidation at the end of the same period. HiFive expects to recover its net working capital investment on termination of the project. The firm is subject to a tax rate of 30% and uses straight-line depreciation. The firm’s cost of capital is 10%. Inflation for the next five years is forecasted to be 3% per year. Required: Using Excel:

i) Calculate the initial investment associated with the replacement project. (Show your workings) (2 marks)

ii) Prepare a depreciation schedule for the current and the proposed machine. (Note: Both machines are depreciated over a five-year period using the straightline method, but the current machine is not new) (2 marks) iii) Calculate the terminal cash flow associated with the project.(Show your workings) (3 marks) iv) Calculate the operating cash flows for both the current and proposed machines. Depict on a timeline (year 0-year 5) the relevant cash flow. (5 marks) v) Determine the net present value and internal rate of return for each alternative. (4 marks) vi) Would you recommend that the firm retain the current machine or purchase the new machine? Remember to include limitations of your analysis. (4 marks) Note: A template is provided for a guide in LEO (under week 12 tile)

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