Critically assess investment and project appraisal and the financial implications of the same: Financial Management Case Study, UCD, Ireland

learning outcomes

•  Critically assess investment and project appraisal and the financial implications of the same
•  Analyze and synthesize financial information in order to arrive at conclusions
•  Assess the impact of simple financial decisions and the risks associated with them
•  Understand and predict the nature of business costs

Sound PLC “SOUND” is an Irish company that produces and promotes musical events. SOUND has been successful in most of its ventures since its formation, enjoying some spectacular successes. However, SOUND has not been immune to poor decision-making and has incurred significant losses on high-risk
productions in the last year. This has resulted in reported profits for the year ended 30th September 20X5 to be lower than market expectations.

As a result of shareholder concerns voiced at the AGM held on 2nd November 20X5, SOUND’s board:

•  Agreed that the board can only authorize the commencement on short-term productions  if a cash surplus of € 250,000 is forecast;
• Agreed that the board can authorize the commencement of international long term productions  only if an indicative positive net present value of €2,000,000 after discounting at the agreed discount rate of 14%;
•  Requested that a draft Risk Management Policy is presented at the next board meeting and that an explicit report on potential risks is presented for consideration by the board at each board meeting;
•  Appointed Cliona Russell to the vacant Managing Director role;
•  Appointed you, Pat Shannon as Non-Executive Director given your finance background.