Calculate the cost of capital using various methods

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Reference no: EM131957628 , Length: word count:2500

Corporate Finance Assignment -

The aim of these assessments is to assist you to:

  • gain a deeper understanding of corporate finance concepts;
  • appreciate current issues discussed/faced in the industry; and
  • apply your knowledge to investigate real companies.

Through these exercises, you will gain a better understanding of how corporate finance concepts can be applied in the real world.

Case study -

Objective: To prepare an analyst report on a public listed dividend paying company. Students will form groups of 4 in order to complete the case study. Students should complete the group sign-up form and return it to their lecturer by week 3. Students who do not return the form will be allocated to a group and will then have a further week to meet with group members, complete the form and return it to the lecturer. Students who do not follow this guideline will be allocated a score of zero for the assessment. Once assigned to a group it is not possible to change. Only electronic copy must be submitted through turnitin. The assignment will be assessed according to the rubrics provided at the end of this document and to the criteria contained in the assessment form that is available on Blackboard. Students are required to attach this assessment form as a cover / front page to the assignment.

Further details are provided on Blackboard.

Skills acquired:

  • discipline knowledge;
  • thinking skills;
  • learning how to learn

Specifically, conduct research on a company and report on key areas of shareholder analysis, risk-return analysis, cost of capital and financial statement analysis.

Case study details -

You are to select a public listed dividend paying company from the country of your study location (e.g. Australia for the Bentley campus) and conduct a detailed analysis on it. You must not select the following company as they will be used in the lecture:

  • Domino's Pizza
  • JBHiFi

The purpose of this assignment is to use your acquired knowledge from this unit to investigate the financial strength of a public listed company. Your research should cover the areas of:

  • shareholder analysis;
  • risk-return analysis;
  • cost of capital; and
  • financial statement analysis

In each of the areas, you are to report your findings using the questions provided below as a guide. If the information is not from the company's annual report, you will have to provide details on

1. where you sourced the information; and

2. comment on how you have verified its reliability.

The report must be written completely by you and your group members. You are not to purchase or reproduce commercial stock reports.

There are four parts to the assignment.

3.21 Shareholder analysis - Who are the owners of the company and the implication to the choice of methods used to calculate the cost of return.

3.22 Risk-return analysis - Analyse the return received over the market for the apparent risks identified in the company.

3.23 Cost of capital - Calculate the cost of capital using various methods and analyse your findings.

3.24 Financial statement analysis - Determine the future of the company by analysing the performance of the company

Additional guidelines

You are preparing an analyst report for a client. Do not merely answers the questions in the case study

It should be written professionally in sentences and paragraphs; not in bullet point form

The questions 3.21 - 3.24 serve as a guide and are not to be repeated in your report where possible, calculations must be shown and assumptions must be clearly stated.

Use of an appendix is recommended; however, there must be clear reference made to the main body

Where possible, use figures from the annual report; this is the most accurate source of information. Do not use calculated figures from the websites (for example ROE)

Do not include definitions or theories from textbooks. This includes definitions of marginal investors, nominees, etc.

Attachment:- Assignment Files.rar

Reference no: EM131957628

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Reviews

len1957628

4/25/2018 7:33:53 AM

Total 2500 words. Please suggest name of the company by tomorrow please browse attachments as all relevant documents needed for this Case study. They include Chicago Footnotes guideline; lecture notes; commercial articles; case study criteria; sample past student paper. My required written parts are: Introduction + 3.21 + 3.23, please be careful about the researched company according to the case study guideline with MUST DO & NOT DO. And sample paper as a advice. Under each analysis, answer questions in detail with data or tables. all questions are addresses in the assessment booklet (first attached). Please using correct footnotes, references, applied formulas with calculation and charts or tables. All of them excluding footnotes and references should be around 2500 words.

len1957628

4/25/2018 7:33:48 AM

The case study assessment is to be submitted on Turnitin; no exceptions. It must be professionally typed; no handwritten submissions; Your work must be assessable through Turnitin. Scanned graphics will not be marked; Only your final submission will be marked. Subsequent email attachments after the assessment due date will not be accepted; Assessment extensions must be requested via the extension form accompanied with a medical certificate within 1 week of the assessment due date. Requests after this period will not be accepted; When you are submitting your extension requests, you must submit your work completed to date. This is to show evidence that you have started doing your assignment and have followed the recommended start times as described in this document. We will accept it in any format; regardless of how incomplete your work is. This will enable us to give a better assessment of your case;

len1957628

4/25/2018 7:33:41 AM

Please save your work often. You can consider services like icloud, Google drive, Dropbox, Sugarsync, etc. Most providers allow you to control the frequency of the automatic syncing. We recommend that you sync on every time your documents saves and change your settings on your Microsoft word to auto save every 5 mins. The student advisers and tutors are able to give some guidance on this if you need assistance. A hard drive/computer failure does not warrant an extension; No pre-marking will be done for your assessments; Please also retain your electronic copy until the final exam finishes for further reference.

len1957628

4/25/2018 7:33:29 AM

Submission instructions - This assignment is due on Friday, 18th at 4 pm. This is a group assignment. You have to commence work on your assignment from the end of week 3 and make considerable progress every week. The presentation of the case study should be in 1.5 lines spacing and 12pt font. It should not be more than 5,000 in words. The word count excludes tables, diagrams, charts, footnotes and references. Your document must be typed and submitted through Turnitin on the Blackboard by the due date. No email copies will be accepted.

len1957628

4/25/2018 7:33:22 AM

Shareholders analysis - showed evidence of planning and effort, reading and understanding, showed evidence of deeper level research and currency of response, provided detail analysis and description of the typical investor of the company, explored and discuss in depth the investor's profile and motivation, showed clear evidence of analysis of the chairman's message in the annual report, showed clear evidence of application of the unit's concepts and explore extensions, provided clear assessment of the impact of marginal investors in the context of the chosen company, explained clearly with aid of diagrams and charts why the analysis is justified with clear reference to the annual report.

len1957628

4/25/2018 7:33:01 AM

Risk-return analysis - clear and succinct summary of the company's risks with evidence of additional research beyond the information provided in the annual report, showed deep understanding of the implications of the risks with detailed explanation, provided clear linkage of the risks to future returns of the company using specific examples from the annual report, correct usage and application of formulas, included tax consideration; eg. franking credits, included all dividend payments, showed strong evidence of research into the company's investment projects; providing diagrams or tables where appropriate, provided a strong argument to link the performance to managerial abilities, contained no irrelevant material.

len1957628

4/25/2018 7:32:55 AM

Cost of capital - demonstrated clear understanding of the task requirements with evidence of critical thinking, correct usage and application of formulas, showed full workings, researched into various theories and methods in ascertaining the cost of capital; with discussion on the use and relevance of each method, clear assumptions provided to justify the usage of values used for Rf and Rm; with commentary on how the data might be improved, provided clear reasoning on the selection between CAPM and DGM and discussion on other methods, used majority of the numbers from the company's annual report and comparing them with other sources, paid particular attention to the date of the datasets and discussed the implications of any mismatch, demonstrated strong evidence of research into the company's borrowings and provided evidence of where the rates were obtained; providing clear assumptions, provided a strong argument to link the WACC to company projects/investments, contained no irrelevant material.

len1957628

4/25/2018 7:32:47 AM

FSA - provided all workings of calculating the ratios, provided footnotes to reference the annual report, gave clear explanation to the use of figures and discussed other options considered, choice of ratios to discussed showed evidence of understanding the company and use of critical thinking, provided clear analysis of the performance of the company through the Du Pont System, showed evidence of research of the benchmarks used, comments on the comparison to the benchmarks showed evidence of critical thinking and analysis, clear assumptions provided to evidence understanding of the use of values from various sources, contained no irrelevant material.

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