You are a Senior Financial Manager in the recently privatised Sodor Railway Engineering Corporation Plc (SREC).

(a) Subsequent to privatisation the Chief Executive Officer of SREC feels that the organisation needs to clarify its mission and objective. In order to achieve this he has asked you to review relevant academic literature and discuss the relative benefits of competing objectives of the firm.

This review of the literature should be written as an essay and refer to academic books and journal articles to support your discussion. It is expected that the essay should be approximately 1,000 words in length.

(b) For the attached case study you are required to produce a report for the CEO, which discusses the viability of the proposed project. This report should:

i. Explain the meaning and relevance of the time value of money.

ii. Calculate the Net Present Value of the project, as specified in the project proposal.

iii. Discuss the viability of the project if, during the course of the final negotiations, changes are made in terms of:
• Sir Hatt asks for a discount;
• The payment schedule is revised;
• The estimated level of costs prove to be inaccurate;
• The provisional cost of capital is incorrect.

iv. Justify assumptions made and explain the relevance of the calculations performed;

v. Include appropriate figures and tables to support your report