FINAL PROJECT

Training program:
(To be fulfilled by the student)
Subject:
(To be fulfilled by the student)
Send to: accounting@eneb.com

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ENEB Business School

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 Final Project Guidelines

Please use this format to submit your final work. The paper must follow all the
guidelines as instructed in order to obtain full credit.

Remember that our team of tutors is available for any questions regarding your
final work. You must present the final version of your work as no previous
corrections will be carried out. To submit the final project, students must use
the template below, with their answers written after each statement.

Please present your final paper according to these requirements:

 Arial 12 Font.

 Margin: 2,5.

 Line spacing: 1,5.

 All fields on the cover page must be completed.

 The document needs to be properly paged.

Your final project must be authentic and individual. Any work that has been
plagiarized or papers written by others or with the help of others are likely to be
failed. If this occurs for the second time, you will not be permitted to obtain your
degree.

Be aware that you are permitted a maximum of two submissions per subject. If
both projects do not meet the standards and fail, the student must pay the
corresponding fee to be evaluated again.

When writing your final project please use Microsoft Office, Adobe or Apache's
Open Office Writer tools (DOC, DOCX, ODT, PDF, etc.). Please consult your

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tutor when using a different format. Additional information about the software
will be needed.

Please use the following format:

ddmmyyyy_Subject_LastNameandName.pdf

Example:

11052019_StrategicManagement_ElsaMoore.pdf

The project should not exceed more than 18 pages, excluding the cover page,
bibliography and the appendix.

Evaluation Guidelines

The final work will be evaluated based on the following criteria:

 Acquired knowledge (25%): the knowledge acquired throughout the

course of the subject will be evaluated through the analysis of the
theoretical data shown in the project presented by the student.

 Development of the Subject (25 %): the interpretation of the thesis

subject by the student and its development will be evaluated in a
coherent and analytical manner.

 Final result (25%): the final evaluation is based on coherent

solutions applied to solve objectives set out in the paper. The
presentation must be conclusive and formatting must meet
established parameters.

 Additional information and bibliography (25%): additional

information regarding the research and subject matter will be

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 evaluated and taken into consideration as a bonus. This consist of:
bibliography, visual graphics, charts, independent studies carried out
by the student, external academic sources, articles of opinion, etc. All
sources, both printed and online, must be referenced according
to the APA regulations.

BACKGROUND

The company ABC, L.C. manufactures some products with an average sales
price of € 25/unit, with fixed annual costs of € 110,000. The average unit
variable costs are € 5.

DEVELOP

a) At what volume of production will the threshold of profitability be reached?

b) Assuming that annual sales are estimated at 20,000 units, being the
distribution evenly over a year, on what date will the break-even point be
reached?
c) What would be the sales value or turnover corresponding to the threshold of
profitability?

2. The company Derabel, S.A. is considering buying a new machine for its
production process. This project means an initial cost of € 200,000 and the
machine is estimated to have a useful life of 5 years. The maximum productive
capacity of the machine is 200,000 units per year. However, the first year it is
expected that the activity will be 70% of the maximum installed capacity,
reaching 100% from the second year.

During the first year, the unit sales price will be € 2.50, the unit variable cost €
1.50 and the fixed annual cost € 60,000, resulting in cumulative yearly
increases of 4% in the price of the product sale, 3% on variable costs and 2%
on fixed costs.

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Also, it is assumed that:
 The company uses a linear depreciation system, and the residual value of
the machine is € 25,000. Besides, the sale value of the machine at the end
of its physical life will be € 30,000 that will be charged in cash.
 The nominal discount rate (kN) used by the company is 8% per year and
constant for the planned period.
 The tax rate that taxes the benefits is 25%. Taxes are paid in the period
following their accrual.
 All production is sold in the reference period.
 All income and expenses are charged and paid in cash.

With the above data, determine the Net Cash Flows after taxes of the project
described above. Calculate the net absolute return.

3. The person in charge of the finances of the company MGT, S.A. wants to
know the company's situation concerning the industrial sector to which it
belongs. For this, it has the following information regarding the industry:
a) General liquidity ratio is 1.55; the acid test is 1.20, and the ratio
between the available and the current liabilities is 0.95.
b) The debt ratio stands at 1.25. The margin on sales is 21%. The
investment rotation is 1.45 times.
c) Economic profitability is around 23%, and financial profitability is
29%
The data referred to the company (in thousands of €) are the following:

Assets Liability and Net Equity

Non-current asset (net) 170 Equity 125

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 Stocks of finished Reservations 25
products 45

Clients 65 External Resources 105

Banks 70 Loans 65
Supplier 30
Total Assets 350 Total Net Equity 350

In addition, it is known that:

 Sales are € 250,000 and its direct cost of € 105,000.
 Amortization of € 70,000.
 Long-term debt generates interest at 5%, short-term bank loans at 7%,
and the departure of suppliers does not accrue any interest.
 The Corporation Tax is 25%.

Calculate the liquidity, acid test and debt ratios, and compare them with the
sector data. It also calculates the economic and financial returns, and the
margin on sales and investment rotation, even making a comparison between
the company and sector.

4. An investment requires an initial disbursement of € 2,500,000 and the

duration of the project is 3 years, in the first of which it generates a cash flow of
€ 1,500,000, in the second € 3,700,000 and the third € 4,100,000.
a) Calculate the Net Present Value of the investment, knowing that
inflation is 3% cumulative annually and that the required
profitability in the absence of inflation is 8%.
b) Calculate the actual internal rate of return of the previous
investment.

5. We know the following data of the company Perfilados, S.A:

a) It bought and consumed € 105,000 in raw materials for the manufacture

of its product and, on average, maintained a stock level of them in the
stock of € 9,250. Calculate the average storage period.
Calculate the average storage period.

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 b) The cost of its annual production is € 198,000, and the average value of
the products under development is € 11,000. Calculate the average
manufacturing period.
c) Taking into account that the company exclusively sold all its annual
production and that the average value of its stock in finished goods
warehouse was € 18,500, it calculates its average sales period.
d) Assuming that the company sold its products for an amount of € 290,000
and that the customers had on average a debt with the company of €
17,000, it calculates the average collection period.
e) With the data obtained in the previous points, it calculates the average
period of economic maturity of Perfilados, S.A.

6. We know the following data of an investment that the company has made:
 An initial disbursement of € 2,000,000 and generates the collections
and payments in the successive years of its duration that are shown
in the following table:
Years Collection (€) Payments (€)
1 Year 4.500.000 3.800.000
2 Year 5.500.000 4.500.000
3 Year 6.000.000 5.000.000
4 Year 4.000.000 3.200.000

Calculate the IRR of the previous project. Justify for what type of
discount this investment will be made.

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