Calculate the annualised standard deviations of market

Reference no: EM131488710

Business Finance Group Assignment

Assignment task description -

In the second part, you will write a report comparing financial performance indicators of two companies you have calculated in the first part and suggest potential investor which company they should consider investing and why.

Part 1 - Assignment questions

Perform the following assignment tasks

1. Calculate the annualised monthly returns for market and two companies.

2. Calculate the standard deviations of the returns of the Market and 2 companies.

3. Calculate the annualised standard deviations of market and two companies.

4. Calculate the beta for both companies.

5. Calculate required rate of return for both companies using the Capital Asset Pricing Model (CAPM)

6. Calculate the after tax weighted average cost of capital (WACC) for both companies. Assume that Black Ltd's cost of debt is 7% whereas While Ltd's cost of debt is 9%. Also assume that both companies are subject to 30% corporate tax.

7. Calculate the Market value of the share of both companies using the Dividend Discount Model. Assume that Black Ltd and White Ltd are growing at 5% and 3% respectively. Also assume that both Black Ltd and White Ltd recently paid $1.10 and $0.95 per share dividend respectively.

Part 2 - Analytical report

Write an analytical report not exceeding 1000 words using the financial performance indicators you have calculated in Part 1. You need to explain each of the performance measure and use them to critically evaluate both companies' future prospect so that potential shareholders make informed judgement as to which company they should consider investing. You also need to use literature support to support your discussion and argument with appropriate citation and references.

Appendix: Monthly ASX index and adjusted share price for Beauty and Ugly Ltd

Month	Black Ltd Share price ($)	White Ltd Share price ($)	Market ASX index
Jan 16	13.05	20.55	4650
Feb 16	13.40	21.15	4770
Mar 16	13.87	20.95	4840
Apr 16	13.12	18.75	4940
May 16	13.37	17.10	4815
Jun 16	13.00	19.35	4788
Jul 16	13.50	20.10	5055
Aug 16	13.90	21.05	5125
Sep 16	14.12	22.15	5035
Oct 16	14.87	23.85	5115
Nov 16	15.25	22.90	5200
Dec 16	16.05	21.85	5255
Jan 16	16.40	23.80	5305

Reference no: EM131488710

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Reviews

len1488710

5/8/2017 7:33:13 AM

This assignment has two parts. The first part is designed to provide you an opportunity to work with a range of real world like (simulated) financial data and information and analyse them and interpret the outcomes using the concept and principles of finance you have learnt in this unit. It is important that you (i) show or define all variables (ii) specify and display formula (where appropriate) and show all workings. Workings are not necessary when used EXCEL but still need to define variables and show formulas. While you may use EXCEL for some calculation, you must complete your assignment in word document. There is no words limitation for this part. Just use many words as you require to answer the question. In the second part, you will write a report comparing financial performance indicators of two companies you have calculated in the first part and suggest potential investor which company they should consider investing and why. The report should meet the basic academic standards such as introduction, body or discussion, conclusion and references. This report should not have more than 1000 words.

len1488710

5/8/2017 7:33:08 AM

General information: Submission mode: Online through VU collaborate drop box. Late submission: Assignment not submitted on or before due date without prior approval for extension will be penalised 2 mark per day. Assignment submitted after 8 days without prior approval will receive ZERO mark. Group contribution: Each member of the group should contribute approximately equally in completing this assignment.

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