Reference no: EM132533336 , Length: word count:3000

To answer Questions 1 and 2 please select one of the following companies:
1. SeekLimited(ASXCode:SEK)
2. A2BAustralia(ASXCode: A2B)
3. Flight Centre Travel Group Limited (FLT)

QUESTION 1
(i) Determine the (a) weighted average cost of capital, (b) debt ratio, (c) debt-to- equity, (d) return on assets and (e) return on equity for financial year (FY) 2019.
(ii)What is the mix of debt and equity for the firm in FY 2019? Do you think the company's capital structure for FY2019 optimal? Discuss.

(iii) What role does the cost of capital play in the overall financial decision making
of the firm's top managers?

QUESTION 2
A: Dividend Policy
(i) Calculate the dividend payout ratio and dividend yield for each year from 2015 to 2019. How can you describe the dividend policy of the company the 2015-2019 period?
(II) What factors would you take into consideration when deciding on the appropriate dividend policy for the company? Is the current dividend policy justified?
B. Working Capital Management
1. (i) Calculate the cash conversion cycle and net working capital for each year (2015-2019). What considerations determine the optimal size of the company's investment in current assets?

2. (ii) Critically evaluate the working capital management policy of the company during the period 2015-2019

QUESTION 3

XYZ Limited is considering to introduce a new fad product which is envisaged to stay in the market for five years from today. The company requires a return of 15% from the project. The following information is available for this new project:
• Cost of new equipment to be acquired: $15,800,000
• Installation and commissioning of new equipment: $200,000
• Depreciation: The new equipment will be depreciated using straight-line depreciation over five years with no salvage value.
• The company is subject to 30% income tax for both income and capital gains.
Sales in units for the next five years are projected as follows:

Year Units Projected selling price per unit

1  140,000                   $600

2  240,000 $600

3  280,000                   $600

4  160,000                   $600

5  160,000                   $520

• Variable expenses per unit $360
• Fixed expenses per year: $400,000
• Working capital: Required initial working capital to get production started:$200,000.
Annual net working capital requirement amounts to ten per cent (20%) of the sales revenue of each year. All working capital is to be liquidated at the termination of the project at the end of year 5. Anticipated inflation rate over the next five years is 2% per annum.
Required: (show your workings)
You have been asked to provide recommendation on the feasibility of the project.
(i) Using Excel, calculate initial cash flow, operational cash flows, terminal cash flow and the free cash flow.
(ii) Calculate the real rate of interest, and sing Excel, calculate the project's net present value (NPV). Show all your workings.
(iii) Using Excel, calculate the internal rate of return for the project?
(iv)In consideration of NPV and IRR calculated in b and c above, do you recommend the project to go ahead? Consider both quantitative and qualitative factors and
justify your decision.

QUESTION 4
Suppose you are the chief financial officer of a medium-sized computer software development firm. Your firm needs $10 million to exploit investment opportunities that will allow it to retain its position in the software market. Identify the financing alternatives (securities) that might be most appropriate for your firm? (Assume your firm is in the early stages of its life cycle). Discuss the plausibility, advantages and disadvantages of each alternative.

Attachment:- finance.rar