Financial Management, Investment Appraisal, and Strategic Performance Evaluation in Healthcare and Public Sector Contexts FINM4012

1. Explain and evaluate how the primary of objective in financial management of maximising shareholder wealth is at conflict with other objectives such as ensuring favourable outcomes for patients. (Note if your organisation is public sector consider the alternative objective of minimising the net cost to the government)

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2. KSA Investments plc is looking to take on a new investment. The company will evaluate two

mutually exclusive projects, whose details are given below. The companys cost of capital is

8%.

Calculate the Payback period

Calculate the Net Present Value (NPV) of both projects

Calculate the Internal Rate of Return (IRR) of both projects

(12 marks)

2b. Critically discuss the merits of each investment appraisal method, then discuss the result of the evaluations you have made of the two projects and advise the company which project should be undertaken (10 marks)

3. Critically evaluate the use of a Balanced Scorecard in your organisation (or a previous organisation you have worked in) a. Outline the Key Strategy (What is the overall goal?) b. Develop a series of metrics based on Financial Performance, Customer, Internal Processes and finally Learning and Growth c. Explain and identify how your Key Performance Indicators (KPIs) will meet the strategy goals d. Evaluate the challenges, discuss the risks of your organisation within the Balanced Scorecard and the challenges to achieving the goals in point 3c (30 marks

4. Rabat Investments is considering investment into Hospital Information System, it has two

choices via leasing or buying the software and equipment.

The purchase price is AED 640,000 and the machine has a 6-year life. If it buys the

machine Rabat will need to fund it using capital that costs them 10% per year. Rabat estimates

maintenance of the system will be AED 35,000 per annum.

Alternatively, the lease payments will be AED 145,250 per year for 6 years with rentals payable at the

start of each year.

1. What are the respective present value costs of purchasing the machine or leasing it?

(6 marks)

1. Consider the theoretical cost of Debt, Preference Shares and Ordinary Shares rank them from

most expensive to cheapest.

(6 marks)

1. Recently one of your company directors has attended a finance conference, on their return the

director has decided the company should fund all projects with internal sources of financing as

they are essentially free. Critically discuss if you agree with this statement.

(6 marks)

1. Discuss whether the company should raise finance (via any means) if it has a project available

with a net present value of BD 10 million

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