Execute stress testing under scenarios of likely adversity

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Reference no: EM131157065

Finance Management

Benchmark - Financial Analysis and Proposal Component 4 and Final Submission

Details:

Throughout this course, you have researched a wealth of data and analytics to construct a comprehensive financial analysis and proposal (excluding tables, figures, and addenda) of a chosen company following the nine-step assessment process detailed in Assessing a Company's Future Financial Health.

There are three parts to the final component assignment of the Benchmark - Financial Analysis and Proposal.

Part One

Apply the final two steps of the nine-step assessment process detailed in Assessing A Company's Future Financial Health (i.e., Step 8: Stress Testing and Step 9: Financing and Operating Plan for Current Year) to compose further assessment of the company/competitor pairing analysis as below:

Perform stress testing under scenarios of likely adversity and value your firm using appropriate valuation techniques on the pro forma financial data analysis you constructed earlier in the course.

Compare your results from step #1 against the current stock price of your chosen company and competitor. Construct an argument in favor of investing in either the chosen company, or the competitor, with sufficient supportive detail and/or data to make your case.

Part Two

Access the three prior component assignments, with instructor feedback incorporated, that you submitted in Topics 2, 4, and 6. Integrate these three assignments into the final Benchmark - Financial Analysis and Proposal submission along with the Component 4 assignment in this topic (Part One) to provide a comprehensive analysis inclusive of all nine steps that flows from start to finish. Note: You may need to re-write certain sections or statements in order to provide a cohesive flow to your submission. Assume this is a real-world proposal you will be presenting and revise or "polish" your work accordingly.

Part Three

Develop a 250-word "introduction" to your analysis and proposal that can serve as an overview in the event that you do present this to a single or group of potential investors. Consider factors that might impede an individual's ability to focus on the information, and present only key and other potentially relevant points this individual or group needs to know.

Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

You are required to submit this assignment to Turnitin. Please refer to the directions in the Student Success Center.

Intrinsic Value of a Firm

Details:

Part One

Select a U.S. S&P 500 Company required to submit either 8-K, 10-Q, or 10-K U.S. Securities and Exchange Commission (SEC) reports. Before proceeding to Part Two, submit your firm selection to your instructor and obtain approval; completing this assignment without instructor approval will result in zero points for this assignment.

Part Two

Upon approval of your selected firm, use the most recent financial reports of the chosen firm to calculate the intrinsic value of the stock. For this assignment, you will use two valuation methods to derive the firm's intrinsic value; an equity valuation model (specified below) and the free cash flow (FCF). The following guidelines apply:

Go to https://www.treasury.gov and obtain the most recent 10-year Treasury yield rate as the risk-free rate;

Go to either Yahoo Finance or Google Finance to obtain the selected firm's current beta (β or beta coefficient);

Assume the expected market return is 10%;

Use the capital asset pricing model (CAPM) to calculate the required rate of return for equity financing purposes;

Make a realistic assumption about the g growth rate (g) and apply either a) the dividend growth model or b) nonconstant dividend growth model equity valuation methods to calculate the intrinsic value of the firm. (Note: If using the nonconstant growth model you must show a minimum of 5 years of future cash flows or future dividends);

Calculate the intrinsic value of the firm and stock price using the FCF valuation model. If the SEC filing provides the Weighted Average Cost of Capital (WACC), use the given WACC to value the firm and its intrinsic stock price. If the WACC is not provided, you must calculate the WACC finding necessary information to do so.

Use the attached "Intrinsic Value of a Firm" resource to present your results and to provide your rationale for your choice of equality valuation model. Note: You must show your calculations to complete this assignment successfully.

Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

You are not required to submit this assignment to Turnitin.

RS-Intrinsic Value of a Firm.docx

Intrinsic Value of a Firm

Instructions:

1. Use the table below to provide your final valuation numbers for the Intrinsic Value of a Firm assignment in Topic 8.

Intrinsic Value using Equity Valuation Model	Intrinsic Value using FCF Valuation Model

2. Provide your rationale for your choice of equity valuation model:

Reference no: EM131157065

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