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Analyse risk and return associated with investments

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Reference no: EM132161988

Learning Outcomes

b) Analyse financial information and evaluate financial performance of a business.

c) Apply time value of money to the valuation of a variety of cash flows, securities and projects leading to sound investment and financing decisions.

d) Analyse risk and return associated with investments.

e) Apply various capital budgeting techniques to investment decision making.

f) Analyse the cost of capital and explore its link to the capital structure of an organisation.

g) Analyse working capital and payout policies and their impact on the liquidity position of a business.

Instructions:

(a) From the list of ASX200 companies below choose any 2 companies NOT from the same sector. Evaluate the capital structures of the two companies over the most recent 5 years and discuss how similar or different they are from their industry average capital structures. Critically comment on what factors could have influenced the capital structures of both firms over the period. What theory of capital structure do you think closely describes the capital structure of each of the companies?

(b) Having examined the capital structures, determine the weighted average cost of capital (WACC) of the companies.

(c) To what extent has taxes influenced the WACC?

(d) You have inherited $5 million from your late grandfather and are considering investing in shares of one of the two companies. Perform a valuation of the two stocks using two approaches, a discounted cash flow approach and the other a relative valuation approach.

(e) Using the results of the valuation above, together with an analysis of how the two companies have fared with regards to risk and return over the most recent 5 years, decide which one to invest in. You should use more than one metric of risk and return in your analysis.

(f) Would your decision change if you consider other factors (qualitative or otherwise) that pertain to these companies?

(g) Critically evaluate the use of standard deviation as a measure of risk of investing in shares. From your research suggest better methods than standard of measuring risk.

In addition to the above you will also be assessed on the following: (see marking Rubric at the end for more description of expectation).
(h) Content, Audience and Purpose

(i) Critical reasoning, presentation and defence of an argument and/or position

(j) Analysis and Application with synthesis of new knowledge

(k) Use of academic conventions and sources of evidence

(l) Effective communication

This assignment must adhere to the following:

1. This assignment must be prepared and submitted individually.

2. You must prepare a Business Report in a Word Document with Excel workings embedded into the Word document. The instructions to embed the Excel workings are as follows:

INSTRUCTIONS TO EMBED AN EXCEL FILE INTO A WORD DOCUMENT

A. Open your Assignment in Word and Click the "Insert" tab.

B. Click the "Object" button on the Text section of the ribbon. Click "Object" from the small drop- down menu.

C. When the Object window opens, click the "Create from File" tab. Browse to the Excel file containing your analysis in the directory where it is located and double-click it to embed it into the Word document. Ensure that you have ticked the box that allows you to embed the Excel file as an icon.

3. The Word document must be properly referenced using the APA referencing style.

Attachment:- CASE ANALYSIS.rar

Verified Expert

This assignment deals Australia organization which provides the security analysis of two companies of different industry which comparisons and the capital structure and the other parameters of the security analysis. On the more an expert with great experience on security analysis proves to be worthwhile for the completion of the assignment.

Reference no: EM132161988

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Reviews

len2161988

11/9/2018 3:17:52 AM

Critical reasoning, presentation and defence of an argument and/or position It is important to be able to justify position Specific position (perspective or argument) fails to take into account the complexities of the issue(s) or scope of the assignment. Makes assertions that are not justified. Specific position (perspective or argument) begins to take into account the issue(s) or scope of the assignment. Specific position (perspective or argument) takes into account the complexities of the issue(s) or scope of the assignment. Others’ Specific position (perspective or argument) is expertly presented and accurately takes into account the

len2161988

11/9/2018 3:17:35 AM

Assessment Attributes Fail (Unacceptable) Pass (Functional) Credit (Proficient) Distinction (Advanced) High Distinction (Exceptional) Grade Description (Grading Scheme) Students expected to produce a well- structured report showing knowledge, critical reasoning and professionalism expected of postgraduate students Evidence of unsatisfactory achievement of one or more of the learning objectives of the course, insufficient understanding of the course content and/or unsatisfactory level of skill development. Evidence of satisfactory achievement of course learning objectives, the development of relevant skills to a competent level, and adequate interpretation and critical analysis skills. Evidence of a good level of understanding, knowledge and skill development in relation to the content of the course or work of a superior quality on the majority of the learning objectives of the course. Demonstration of a high level of interpretation and critical analysis skills.

len2161988

11/9/2018 3:16:33 AM

Content, Audience and Purpose (Students should show an understanding of the essence of the assignment, the central idea(s) to be addressed and pitch the report accordingly) 5 Does not meet minimum standard Demonstrates no awareness of context and/or purpose of the assignment. 0-2.4 Meets minimum standard Demonstrates limited awareness of context and/or purpose of the assignment 2.5-3.24 Moves beyond minimum standard Demonstrates consistent awareness of context and/or purpose of the assignment. 3.25-3.74 Exceeds minimum standard Demonstrates an advanced and integrated understanding of context and/or purpose of the assignment. 3.75-4.24 Exceeds minimum standard and exhibits high levels of independence Consistently demonstrates a systematic and critical understanding of context and purpose of the assignment. 4.25-5

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