FINM3005/7044 Corporate Valuation/Applied Valuation

FINM3005/7044 Corporate Valuation/Applied Valuation
Semester 1, 2014
Assignments

Select one company from the list below, to be your subject of analysis for both Assignments 1 and 2:
? Coca-Cola Amatil Ltd (CCL)
? Harvey Norman Holdings Ltd (HVN)
? iiNET Ltd (IIN)
? Village Roadshow Ltd (VRL)

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Assignment 1
Weighting: 10% of assessment
Due date: By 4pm Wednesday 26 March 2014
Word limit: 1000 words
To be conducted in groups of 4 or 5 students.

Required: Estimate the cost of capital for your chosen company
Showing all calculations, estimate the cost of capital (weighted average cost of capital) for you chosen
company. This will involve separate estimates of the company’s cost of debt and cost of equity, with
the latter implying that you also estimate the company’s beta.
Additional points
? Although certain estimates may be readily available online (for both the costs of debt and
equity, and in particular beta for the latter), it is expected that you estimate these yourselves
using the methods demonstrated in class.
? Please submit only TWO files via Wattle: A Word document containing the written
assignment, and an Excel file containing any data/calculations undertaken within the
assignment; both via the first named group member on the cover page. There is no need to
show detailed workings within the Word file. Limit the Word file to a concise explanation of
your methods, the source of your data, your conclusions drawn. The usage of brief tables
and/or formulas which may add weight to your discussion, are encouraged.
? There are no strict formatting requirements, however do include a 100 word abstract,
reference list containing any cited articles, and use subheadings where appropriate. You may
include appendices if you feel they add to your assignment, but be aware that they will not be
considered as important as the content of the assignment, during marking.

? The abstract, reference list, and any appendices are not included in the word limit, but all
other content, including tables, are. Please make sure the word limit is adhered to.

? Use Times New Roman font in a 12pt font size, and 1.5 or double line spacing throughout
your document.
This submission is due by 4pm, Wednesday 26 March 2014, and is to be made electronically via
Wattle. Ensure that you also add a cover page to your submission identifying the group members, and
provide a statement on this declaring that the assignment is your own work.

Assignment 2
Weighting: 15% of assessment
Due date: By 4pm Wednesday 7 May 2014
Word limit: 1500 words
To be conducted in the same groups as Assignment 1

Required: Value a share in your selected company
It is expected that you will conduct both a DCF and a relative valuation, as per the procedures covered
in class. This assignment is an extension of Assignment 1, and it is expected that you will draw upon
your cost of capital/equity estimates calculated in that component as required (no need to recap the
process of Assignment 1). State clearly any assumptions you have made (e.g. future growth
expectations), and provide convincing written arguments to support these. Your final answer may
consist of a weighting of the two valuation methods, which you feel is appropriate given the company
you have chosen.
Additional points
? You are not expected to use any contingent claims methods for this assignment.
? Like Assignment 1, please submit only TWO files via Wattle: A Word document containing
the assignment, and an Excel file containing any calculations undertaken within the
assignment; both via the first named group member on the cover page. There is no need to
show detailed workings within the Word file, but concise explanation of your methods, and
usage of graphs, brief tables and/or formulas which add weight to your discussion are
encouraged.
? Make sure you provide discussion about the assumptions you have made, and why. For
example, if you use expected growth rates found from another source, it is imperative that you
thoroughly explain why these rates are appropriate for your company. Alternately you may
come up with your own figures. While there are no right or wrong answers for assumptions
made where necessary, you will be graded on your ability to explain why you believe they
are appropriate.
? There are no strict formatting requirements, however do include a 100 word abstract,
reference list containing any cited articles, and use subheadings where appropriate. You may
include appendices if you feel they add to your assignment, but be aware that they will not be
considered as important as the content of the assignment, during marking.

? The abstract, reference list, and any appendices are not included in the word limit, but all
other content, including tables, are. Please make sure the word limit is adhered to.

? Use Times New Roman font in a 12pt font size, and 1.5 or double line spacing throughout
your document