Recent Question/Assignment

This assignment is to be completed in groups and submitted via CloudDeakin as a MS Excel file and a MS PowerPoint file. The Excel file must be an original created by you for this assignment.
Deadline for submission: 8:00AM Monday 20 May 2019 (week 11).
Extensions must be negotiated at least one week prior to the above deadline by email. Requests for extensions made within 1 week of the deadline will only be considered if progressive work to date is submitted with the request. Late submissions (for more than 5 days and without an agreed extension) will not be marked but will be considered in a pass/fail situation. 5% penalty is applied for every day or part day of late submission up to 5 days (without an agreed extension).
Assignment Details:
You are required to develop a spreadsheet-based decision model that can be used to investigate and explore decisions and risks relating to taking a business loan (e.g. for investment) for a small-to-medium sized business. The model needs to be generic enough to enable the decision maker to explore the size of the loan that is viable/manageable within different scenarios of income, cost, expenses, loan amount, deposit made on the loan, repayment amount, other financial commitments, the amount of interest paid etc. and understand the risks associated with meeting the loan commitments.
The decision model must be realistic and easy to use. The level of complexity modelled, for example the choice of deterministic vs. stochastic inputs, input distributions, etc., is left to your discretion. However the model must enable the user to input the following business cost/expenses and loan details/options.
· Utilities (Electricity& Gas &Water)
· Telephone/mobile
· Insurance
· Maintenance
· Paid salaries
· Other
No data is provided. You are required to create a fictitious business and demonstrate the utility of the decision model using real data where available (e.g. interest rates) and create data where it is not (e.g. income, business expenses).
Note that Net Profit = Sales revenue – Total variable costs – Fixed costs – Overheads.
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The minimum requirements of the decision model are:
1. Ability to enter loan details, income, costs and expenses to explore decision options relating to the loan amount and repayments to calculate outputs such as total interest paid and duration of loan.
2. Ability to understand the impact of variation to the loan interest rate, income, cost and expenses over the duration of the loan.
3. Stochastic treatment of some of the inputs to explore resulting simulated output and summarize risks. The PowerPoint presentation should form the content of a report that includes:
1. A brief description of the model (maximum 100 words)
2. A bubble diagram or similar capturing the conceptual model used and assumptions behind the decision model (Optional: Using Analytica).
3. The decision model copied from the spreadsheet.
4. The best and worst case scenarios for the data you have used, and a discussion of the consequences.
5. Summary report of the sensitivity analysis of inputs.
6. Risk analysis report corresponding to the simulation modelling along with summary of input parameters/distributions used.
File Marks*
model description, conceptual model as a bubble diagram and assumptions PowerPoint 5
Spreadsheet-based decision model PowerPoint & Excel 5
Scenario and sensitivity analysis reports PowerPoint & Excel 8
Stochastic variables including choice of distributions PowerPoint & Excel 5
Simulated output distribution and Risk analysis report PowerPoint & Excel 5
Overall presentation PowerPoint & Excel 2
* Total unit mark for assignment 2 is 30%.
Feedback prior to submission
Students are able to seek assistance from the teaching staff to ascertain whether their assignment conforms to submission guidelines, through:
- Discussion Forum, so other students can also benefit from your questions and replies
- Consultation sessions (dates are available in the CloudDeakin page)
Feedback after submission
Your assignment feedback will be returned within 2 weeks in a rubric via CloudDeakin with an overall mark together with comments.
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Assurance of Learning
This assignment assesses following Graduate Learning Outcomes and related Unit Learning Outcomes:
Unit Learning Outcome (ULO) Graduate Learning Outcome (GLO)
ULO1. Conceptualise, formulate and represent a business problem as a decision model.
ULO2. Develop and solve business problems using advanced decision modelling techniques such as optimisation, stochastic modelling and risk analysis in spreadsheets.
ULO3. Interpret and analyse the results; investigate the sensitivity of the solutions to the assumptions of decision model. GLO1: Discipline-specific knowledge and capabilities
GLO4: Critical thinking
GLO5: Problem solving

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