BAFN600: FINANCE AND QUANTITATIVE METHODS
Due date : 23.59AEDST, 22 October 2017
Weighting : 25%
Length : 3000 words 10% words excluding references and appendices
Assessment Task
Select a company from the list below:
COMPANY NAME
SYMBOL
GICS SECTOR
Cochlear Ltd
COH
Health Care
Boral Ltd
BLD
Materials
Bluescope Steel Ltd
BSL
Materials
Metcash Ltd
MTS
Consumer Staples
Seek Ltd
SEK
Industrials
ResMed Inc
RMD
Health Care
Tatts Group Limited
TTS
Consumer Discretionary
Washington H Soul Pattinson & Company Limited
SOL
Energy
Crown Resorts Ltd
CWN
Consumer Discretionary
Cleanaway Waste Management CWY Industrials
Notify the lecturer in charge of the title of the company you have selected by 25
August 2017.
Required:
Suppose you work for an S&P/ASX20 company which is exploring opportunities to acquire a business. Chief Executive Officer (CEO) is seeking your recommendation whether the company you selected would be a worthy target for acquisition. You have been asked by CEO to write a report addressing the industry outlook, risk profile, cost of capital and dividend policy and make recommendations.
A) Industry and market outlook
Describe the economic and industry environment for the industry in general and the selected company in particular. Critically evaluate and comment on the key factors that affect the company’s attractiveness for investment.
B) Risk analysis
Outline and comment on the risk (both systematic and unsystematic risk) profile of the company. Determine the beta for the firm using raw data. Discuss the issues associated with estimating beta.
C) Cost of capital and capital structure
Determine the cost of capital for each source of finance as well as the weighted average cost of capital for 2016. What does the WACC suggest for the company? Provide an evaluation of the company’s capital structure policy and recommend an
appropriate capital structure policy for the company. Do you find the capital structure risky for the company? Justify your answer.
D) Dividend policy
Analyze the company’s dividend practices and the use of internal funds over the
2007-2016 period. Describe the dividend pattern and policy followed. E) Share price performance
Analyze changes in the of share price over the past 10 years, and based on your
analysis discuss the performance of the company over the past 10 years.
Lodgement of assignments
Students must submit assignments electronically via Turnitin. The software used for checking originality compares works submitted by students with published material from a variety of sources including the Internet.
The assignment is to be submitted via LEO/Turnitin and will be checked for originality. A Turnitin similarity score of 10% or greater will be considered cause for concern.
The assignment is to be submitted via LEO/Turnitin by 23.59AEDST 15 October
2017. Penalties will be applied for late submission. Assessment tasks submitted after the due or extended date will incur, for each whole or part of a calendar day that the work is overdue, a 5% penalty of the maximum marks available for that assessment task up to a maximum of 15%. Assessment tasks received more than three calendar days after the due or extended date will not be allocated a mark.
Format of the assignment
An assignment coversheet (ensure group members’ full names and student
numbers are correctly written, and the part each student completed specified)
A table of contents
An introduction
The body of the assignment
References
12-point Arial or Times New Roman font with 1 inch margins on all sides.
Double-spaced
All pages following the cover page should have a page number.
Contribution sheet completed by each student is handed in to the lecturer within the due date (23.59AEDST, 15 October 2017) via email.
Appropriately cite reference for original work, author(s) etc. Citation and referencing must conform to Harvard/APA 6 referencing system.
Scoring Rubric
Maximum marks Allocated marks
Introduction and purpose of analysis 1
A Industry and market outlook
Describe the economic and industry environment for the industry in general and for the selected company in
particular. Critically evaluate and comment on the key
factors that affect the company’s attractiveness for
investment. 3
B Risk analysis
Outline and comment on the risk (both systematic and unsystematic risk) profile of the company. Determine
the beta for the firm using raw data. Discuss the issues
associated with estimating beta. 4
C Cost of capital & capital structure
Determine the cost of capital for each source of finance as well as the weighted average cost of capital for
2016. What does the WACC suggest for the company?
Provide an evaluation of the company’s capital structure policy and recommend an appropriate capital structure policy for the company. Do you find the capital structure risky for the company?
Justify your answer. 5
D Dividend policy
Analyse the company’s dividend practices and the use of internal funds over the 2007-2016 period. Describe the dividend pattern and policy followed. 4
E Share price performance
Analyse changes in the of share price over the past 10 years, and based on your analysis discuss the performance of the company over the past 10 years. 4
Conclusion & recommendations 1
Presentation (Contribution Sheet, referencing, spelling,
grammar, spacing, proper use of tables, figures, etc.) 3
Total 25
APPENDIX 2: Rubric for Group Assignment
LOs
Criteria
Standards
Below Expectations
Meets Expectations
Exceeds Expectations
Level 1 (NN) Level 2 (PA) Level 3 (CR) Level 4 (DI) Level 5 (HD)
LO2
Apply risk and return relationships to the valuation of financial assets Displays a poor understanding of risk and return relationships to the valuation of financial assets.
Fails to address the question posed.
Arguments are implausible and unsubstantiated.
Limited and/or irrelevant research. Displays some basic understanding of risk and return relationships to the valuation of financial assets
Barely answers the question posed.
Arguments are generally plausible with some evidence.
Basic research Displays above average understanding of risk and return relationships to the valuation of financial assets
Provides above-average answer to the question posed.
Arguments with reasonable support.
Adequate research Displays high level understanding of risk and return relationships to the valuation of financial assets
Demonstrates high standard of insight and originality.
Arguments are well-supported. More than adequate research. Displays extraordinary high level understanding of risk and return relationships to the valuation of financial assets
Demonstrates exceptionally insightful, interesting and fully supported arguments.
A highly-structured and comprehensive response to the task.
Extensive and relevant research.
LO5
Examine the issues involved in raising debt and equity capital for the firm in terms of their impact on the firm’s financial structure and risk Displays poor grasp of raising debt and equity capital for the firm in terms of their impact on the firm’s financial structure and risk.
Fails to address the question posed.
Arguments are implausible and unsubstantiated.
Limited and/or irrelevant research. Displays basic grasp of raising debt and equity capital for the firm in terms of their impact on the firm’s financial structure and risk.
Barely answers the question posed.
Arguments are generally plausible with some evidence.
Basic research Displays above-average grasp of raising debt and equity capital for the firm in terms of their impact on the firm’s financial structure and risk.
Arguments with reasonable support. Demonstrates above average standard
pf insight and originality
Adequate research Displays above-average grasp of raising debt and equity capital for the firm in terms of their impact on the firm’s financial structure and risk.
Arguments are well-supported. Demonstrates high standard of insight
and originality.
More than adequate research. Displays above-average grasp of raising debt and equity capital for the firm in terms of their impact on the firm’s financial structure and risk.
Demonstrates exceptionally insightful, interesting and fully supported arguments.
A highly-structured and comprehensive response to the task.
Extensive and relevant research.