FINANCIAL PLA

Assignment/courseworkgeneral submission requirements· Your student identification number must be clearlystated at the top of each page of your work.· Each page must be numbered.· Pleaseuse a minimum font size of 12.· Where appropriate, a contents page, a list oftables/figures and a list of abbreviations should precede your work.· All referencing must adhere to School/Institutionalrequirements.· A word count must be stated at the end of yourwork.· Your course, year of study and the relevant modulemust be included as a “footer” on each page.· Appendices should be kept to the minimum and be ofdirect relevance to the content of your work.· All tables and figures must be correctly numberedand labelled.· Your assignment/coursework should be submitted in one A4 transparent pocket.·  Please donot staple your workGrantchester Rovers is aprofessional football club having had some success nationally and in Europe inrecent years. As a result of this, and astute financial planning and management,the club have accumulated an additional £15 million to spend on futuredevelopment ready for the 2015/2016 season. The board of directors areconsidering two, mutually exclusive options, for investing the funds availablewith a view to the future.The first option is to acquireanother player. James, a creative and goal scoring midfielder, has attractedthe attention of the team manager and is available from his current club for atransfer fee of £15 million. A decision to acquire James would release an olderplayer, Jenkins. An offer of £3 million has already been received and Jenkinshas indicated he would like to go. This offer will only be accepted if James agreesto sign for Melchester. If this does not happen, Jenkins will be expected tostay at the club until his contract expires in three years. During this time Jenkinswould receive a salary of £350,000 per year and a loyalty bonus of £1 millionat the end of his contract. If Jenkins leaves now his loyalty bonus will bepaid now. James would want a salary of £500,000 per year and a terminal bonusof £2,500,000. Assuming James is acquired, the team manager estimates thatmatch day receipts will increase by £ 1.5 million in the first year and by 5%year on year after that.. There would also be an increase in shirt sponsorshipwith a £6 million payment on at the start of 2015/16 season. In addition Grantchesterexpect to see a £1 million increase in broadcast revenue in 2015/16 with a tenper cent year on year increase and increased merchandising sales of £120,000 in2015/2016 with a five percent year on year increase.The second option for the club isto improve its hospitality facilities especially the corporate boxes. TheBarnes stand would be developed at a capital cost of £5 million and morecorporate hospitality boxes opened plus there would need to be an improvementin bar and kitchen facilities needing a further £2 million of capitalexpenditure and £1,000,000 of working capital. Match day revenues in 2015/2016would increase by £2 million, increasing every year by 5%. Grantchester havecontracted for a new ground to be built ready for the 2020/21 season. Required:Part 1:Using the information given abovecalculate the effects on cash flow for both sets of circumstances viz: Thepurchase and sale of James and Jenkins and the resultant cash flows and theimprovements to the Barnes stand and those resultant cash flows.IMPORTANT – All capital expenditure/receipts from player movements andimprovements plus any expenditure on working capital should be done prior tothe first season.You are only required to calculate Net Cash Flows for both options,there are no Opening and Closing Balances. You should calculate net cash flowsfor the following: Pre-season expenditure, 2015/16, 2016/17, 2017/18, 2018/19,2019/20 and Totals.40 marksPart 2:Using your results from part 1calculate Net Present Value for both options using present value rates shownbelow:2015/16  0.8932016/17  0.7972017/18  0.7122018/19  0.6572019/20  0.636As with Part 1 all capital expenditure and working capital should be treatedas occurring Pre-season in Year 0.30 marksPart 3:From the results of your work inpart 2 make a recommendation as to which option should be undertaken from afinancial point of view. It is vitally important that a business develops plansfor the future. Briefly discuss and explain the planning process and the roleof forecasted financial statements.Skill CategorySkill Elements to be developed1.  Communicationsa. Writtenb. Presentation: verbal and writtenc. Listening and interpretationd. Reading and interpretation2.  Numeracya. Calculation/estimationb. Understanding conventional numerical data.c. Handling and interpreting date.3.  Technologya. Use/application of ICTb. Electronic communicationsc. Information retrieval and manipulation4.  Learning and Studya. Personal time managementb. Learning/study/searchc. Learning technology5.  Interactive Groupa. Team workingb. Taking initiativec. Leadership/managing others6.  Problem Solvinga. Identifying key issuesb. Planningc. Managing tasksd. Creativity and originality7.  Professionalisma. Ethical evaluationb. Responsibilityc. Entrepreneurshipd. Self reflection evaluatione. Career/career development awareness.