BUSINESS 11

Assignment 1 S2 2025

Due: 15 August 11:59pm (NZT)

Assignment 1 will be marked out of 50 marks and is worth 10% of your final grade.

Overall Presentation

Submission: Type your answers into the Answer booklet and submit your assignment by 11:59pm on

15 August 2025 via Canvas. Please keep a copy of your assignment incase there are technical issues with your submission.

A WORD document or PDF file of your assignment must be submitted on Canvas. Please follow the instructions below to submit your assignment.

1.   Save your assignment as a WORD document or PDF file.

2. Rename your assignment file name to your last name, followed  by a comma  and your  first name. For example: Bloggs, Joe    A1. (The last name is Bloggs; A1 is Assignment 01).

3.   You can upload the file on Canvas by going to Assignments, then click on Assignment 01. You will see the Submit Assignment button on the right-hand side of the webpage. A message box will show up, and you need to click on the Choose File button to locate your assignment file, which you had renamed in the above steps, and click OK. The last step will be clicking the Submit Assignment button in the new message box to submit your file.

Note:  If you want to replace the existing file you can simply repeat the step 3 above. You  can do that any time before the due date.

Answer Booklet: Answers must be typed into the Answer Booklet using Calibri font style of at least size 10. This provides practice for answering questions in the exam booklets. If calculations or tables are required for an answer, they should be typed, set out neatly and labelled clearly in the Answer  Booklet in the space provided.  Bullet point answers are acceptable only if the whole sentence makes sense.  The size of each box to answer each question is intended to be enough to answer the question, however, boxes can be expanded if necessary.

Disciplinary  knowledge: The   purpose  of  this  assignment   is  to   be  able  to  demonstrate  an understanding of the material covered in Modules 1 to 3 and apply appropriate methods to solve problems and explain the impact of events on business activity.

Solution seeking: For any calculation type questions, you should apply appropriate problem-solving processes systematically. Show all workings,  no  matter how trivial as  marks are awarded for partial work. This is good practice for the exam.

Written Communication: A high standard of written expression and presentation is expected of your

assignment. Correct spelling and grammar are essential. Discussions should be concise, structured

in a logical order, and relevant to the question. Consider using the resources of the Learning Hub

for    extra     support. https://www.learninghub.ac.nz/writing/paraphrasing-summarising-and- techniques/

Referencing: APA referencing is to be used where necessary. You DO NOT need to reference the assignment question or references provided in the question. However, you DO need to reference any text if you have QUOTED or  PARAPHRASED it. Always answer the questions in your own words. (See the library course page for details on how to use APA referencing).

Refer toReferenCite - Quick©ite - APA 7th (auckland.ac.nz)

If you feel you need to provide references 一 space is provided for your references to all the

questions at the end of the answer book 一 this space can be expanded.

Questions                                                                                                                    50 marks

QUESTION 1: Budgeting and Professional Emails (26 marks)

Sunshine Smoothies & Shakes operates from a kiosk on a large university campus. Its peak season runs from October to December, when warmer weather and student traffic lift demand. Paul Black (store manager) and Noah Mah (accountant) are preparing budgets for Quarter Four of 2025.

Below is the information you will need to assist them in planning for the upcoming season.

Sunshine Smoothies & Shakes sells three main products: Fruit Smoothie, Protein Shake, and Açaí Bowl. The table below shows the budgeted selling prices and cost prices per unit for each product.

Product Details for Q4 2025:

The following table outlines the expected monthly sales volume for each product over the fourth quarter of 2025.

Projected Sales for October to December 2025:

To ensure smooth operations, the business plans to maintain an adequate stock of each product by purchasing inventory in advance. The table below shows the planned purchases for each product over the quarter.

Projected Inventory Purchases for October to December 2025:

Additional Business Information

• Introduction of Credit Sales: In Q4 2025, the business secured a catering contract with the student union to supply their products at various campus events. These sales will be made on credit, accounting for 30% of total revenue. For credit sales, 55% is expected to be collected in the month of sale, 40% in the following month, with the remaining 5 % anticipated to be uncollectible.

• Payment for Purchases: 30% of inventory paid in the month of purchase and 70% in the following month. Purchases during September 2025 were $2,800 (all paid in October).

• Annual food-safety licence: One-off $3,200 due October (paid in October).

• Equipment maintenance: $1,800 due November (paid in November).

• Monthly Expenses: The store incurs the following monthly expenses, paid within the same month:

o Salaries: $5,800 per month.

o Rent: $4,700 per month.

o Utilities Expenses: $1,900 per month (covering power, water phone, internet, etc.).

o Marketing and Promo: $900 in October; $1,100 in November; and $1,300 in December.

• Financing inflow: The owner will draw a short-term bank loan of $5,000 in October (cash received in October; interest and principal falls outside this quarter).

• Opening cash balance (1 October 2025): $2,000.

Required:

(a)      Prepare a Sales Budget for the fourth quarter of 2025. (6 marks)

(b)     Prepare an Inventory Purchases Budget for the fourth quarter of 2025. (4 marks)

(c)      Prepare an Other Expenses Budget for general expenses for the fourth quarter of 2025. (2 marks)

(d)      Prepare a Cash Budget for the fourth quarter of 2025. (5 marks)

(e)     Writing a Professional Email Using AI Assistance

As the company's accountant, Mr. Noah Mah ([email protected]), you are

required to draft a professional email to the store manager, Paul Black, at

[email protected], updating him on the company’s cash position for Quarter Four.

You will use ChatGPT (or a similar AI tool) to help draft and refine your email.

Email Content Requirements

The email should be no longer than 550 words and must include the following details:

1. Quarterly Cash Flow Summary: Provide a summary of the cash inflows and outflows during the fourth quarter of 2025, highlighting any significant transactions or patterns.

2. Financial Health Indicators: Discuss two key indicators that reflect the financial health of the business, using data from the cash budget.

3. Operational Adjustments: Recommend two operational adjustments that could help manage cash flow more effectively in future quarters.

QUESTION 2: Time Value of Money (24 marks)

Part (a) 一 Expanding a Home Décor Brand (8 marks)

You own an interior design business and wish to partner with an established home décor brand. To do this, you must purchase a “brand license” costing $350,000. You are presented with three possible approaches to payment and timing:

Option 1: Immediate Payment Discount

•     Pay $350,000 now, in one lump sum.

•     Receive a 3% discount on the license fee if you pay immediately.

Option 2: Financed Payment over 4 Years

•     Pay the $350,000 in equal instalments over 4 years.

•     The interest rate is 6% per annum, compounded monthly.

•     Payments are made monthly, at the beginning of each month.

Option 3: Wait and Invest

•     Wait 3 years before buying the license.

•     In the meantime, invest the $350,000 at an interest rate of 5% per annum, compounded annually.

•     However, the cost of the license will increase by 12% after 3 years due to market and inflation trends.

Required:

i.       Immediate Payment:

Calculate the actual amount paid for the license if you take advantage of the 3% discount right away. (Show your calculation and round to two decimal places.) (1 mark)

ii.       Financed Payment over 4 Years: Calculate the total amount paid across all payments. (Show all workings; round to two decimal places.) (4 marks)

iii.      Wait and Invest:

•   Calculate  how  much  $350,000  grows  to  in  3  years  at  5%  per  annum  (compounded annually).

•   Compare this amount to the increased license fee (12% higher after 3 years).

•   State whether there is a surplus or shortfall. (Show all workings and round to two decimal places). (3 marks)

Part (b) 一 Saving for a Family Trip (5 marks)

Asha plans to take her family on a 10-week trip abroad in 9 years. Currently, such a trip costs $45,000.

She invests $30,000 in a moderate-risk equity fund earning 7% per annum (compounded annually).

Based on initial projections, in 9 years her lump sum could grow to $55,155. However, due to rising prices, the trip’s cost could also reach about $60,000 in 9 years.

Required:

i.       Discuss whether Asha s current plan (a single $30,000 investment at 7% p.a.) is sufficient for her goal. Consider the real value of savings in light of inflation and the opportunity cost, and whether there are better ways to invest. (2 marks, max 200 words)

ii.       Propose one realistic adjustment Asha could take to ensure she meets or exceeds the $60,000 target. Explain the potential benefits and risks. (2 marks, max 200 words)

iii.      Conclude with your opinion on whether Asha should keep her existing plan or modify it, along with a brief justification for the recommendation. (1 mark, max 100 words)

Part (c) 一 Retirement Planning (11 marks)

You are a financial advisor specializing in retirement finance issues. Amelia, aged 40, hopes to retire at 65. Below are several scenarios she wants to explore.

Required:

i.      Amelia has $70,000 currently in a retirement account. She will leave this untouched until she is

65, with no additional contributions. If the account grows at 8% per annum, compounded

annually, how much will she have at age 65? (Show your calculation and round to two decimal places.) (3 marks)

ii.       Recognizing she needs more funds, Amelia plans to make a fixed annual deposit of $10,000 at

the end of each year into a separate account also earning 8% per annum (compounded

annually). She wants to reach $400,000 in this second account. How many years of these

$10,000 deposits will it take to accumulate $400,000? (Round up to the next full year). (3 marks)

iii.       Now suppose Amelia has a firm timeline of 15 years for accumulating $400,000 with annual

$8,000 deposits. She asks: What annual interest rate (compounded annually) does she need to earn to reach $400,000 in 15 years? (Provide the range of the annual interest rate using the

appropriate interest table). (3 marks)

iv.       Provide a brief comment on how a national retirement scheme (e.g., KiwiSaver in New Zealand, or another government-sponsored plan in your country) might supplement Amelia s retirement savings. Identify one primary advantage (e.g., employer or government contributions) and one  limitation (e.g., funds are locked until retirement). (2 marks)

(Total for Question 2: 24 marks)