Finance - service company
Assignment Instruction
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Assignment Title |
Individual Essay Report on: Evaluation of Investment Decisions and Working Capital Management |
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Procedure for or where to submit work (including file name format for TurnItIn where applicable) |
· Submit the assignment to the instructor through College email by the deadline date · Use the file name specified by the instructor for the assignment (normally your name course number) [Mustafa FIN 505] · Provide a printed copy in class by the deadline date · College policy requires instructors to process all written assignments through TurnItIn · One mark is deducted for each calendar day of late submission |
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Assignment Task |
Refer to the attached sheet for detailed assignment instructions. |
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Course Learning Outcomes Assessed |
4,5 |
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Word or Page Limit |
Minimum 1,500 words. |
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Presentation Format (e.g. MS Word document) |
MS Word document |
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Resources and Support Available |
College library, internet newspapers, magazines, HBR cases. Or other reference sources. |
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Evaluation Criteria |
The instructor evaluates assignments and awards marks based on the criteria as detailed in the marking rubric attached |
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Peer or Self-Assessment Required |
N/A |
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Feedback Details |
After marking the assignment, the instructor reviews the work with each student and discusses overall performance based on the evaluation criteria. The instructor uses a standard assignment feedback form. |
Report Marking Rubric (Written Report)
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Criteria |
Scales with Explanations |
MAX MARKS |
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Title, introduction and table of contents |
0 It is unclear, irrelevant and unspecific. |
0.5 Some information is unclear, irrelevant and unspecific |
1 It is clear, relevant, specific and informative. |
1 |
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Description and explanation of sources of capital and the importance of cost of capital |
0 less than 1 Incomplete description of the sources of capital where only one or two sources are identified and importance of cost of capital not explained. |
1 less than 1.5 Some Incomplete description of the sources of capital where only three sources are identified and importance of cost of capital not explained well.
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1.5 - 2 Good description of the sources of capital where 4 to 5 sources of capital are identified. Importance of cost of capital explained well with examples |
2 |
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Evaluating the Cost of Capital |
0-2 The cost of capital estimation was not appropriate; and the required assumptions were not stated clearly. The techniques were not applied as required. |
2-3 The cost of capital estimation was acceptable; however only one assumption was made or not stated clearly. The techniques applied were brief, not with all the steps. |
3-5 The cost of capital estimated very well and three to four assumptions were clearly stated. Good techniques applied to find the cost of each source of capital was done well, showing all steps in the process. |
5 |
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Evaluating Investment Decisions |
0-2 Explained only one tool used as a capital budgeting techniques and the decision criteria not explained well. Was very briefly stated. |
2-3 Explained any two tools used as capital budgeting techniques and the decision criteria also explained. Was explained well. |
3-5 Explained any three tolls used as capital budgeting techniques and the decision criteria also explained well. |
5 |
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Evaluating Working Capital Management |
0-2 Identification of cash flows and other assumptions not stated clearly. Use of capital budgeting techniques not appropriate and the decision criteria not explained well. |
2-3 Identification of cash flows and other assumptions stated briefly. Use of capital budgeting techniques are acceptable and the decision criteria also explained. |
3-4 Identification of cash flows and other assumptions stated well. Use of capital budgeting techniques done well and the decision criteria also explained well. |
4 |
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Organization or work, references and attachments |
0-1 No title page, no table of contents, only headings and subheadings. |
1-2 Title page, no table of contents, headings and subheadings and attachments, not so well organized. |
2-3 Title page, table of contents, headings and subheadings and attachments, well organized. |
3 |
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TOTAL MARKS WRITTEN REPORT [OUT OF 20] |
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Presentation and Discussion Marking Sheet
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ORAL PRESENTATION RATING SCALE (2 marks for each, if strongly agree and 0, if strongly disagree) |
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Presenter Characteristics: |
Strongly Disagree |
Disagree |
Agree |
Strongly Agree |
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Clearly stated the purpose of the presentation |
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Was well-organized and clear in the content |
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Answered questions authoritatively |
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Appeared confident |
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Prepared a good powerpoint presenatation |
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TOTAL MARKS PRESENTATION [OUT OF 10] |
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INSTRUCTOR’S GENERAL COMMENTS:
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Evaluation of Investment Decisions and Working Capital Management
The Report is Individual work
Detailed Instructions:
(1) Select a listed company of your choice, the company should be publicly traded and have at least one year of trading history and one set of annual financial statements. The company can be listed in any stock market of the world (preferably the NYSE). You may visit the website http://www.morningstar.com or http://finra-markets.morningstar.com/MarketData/Default.jsp and select any listed company of your choice and download the last two years financial statements as data that you will use for your report.
(2) Attach the financial statements as appendix to your report.
(3) Introduction: Write a brief introduction about the company, which should include a brief description, its founders, activities and history about how the company raised capital in the past.
(4) Description of the Capital Structure: The capital structure of many companies includes two or more components, each of which has its own cost of capital. Listed companies may be said to have a complex capital structure. The major components commonly found are:
1. Debt
2. Preferred stock
3. Common stock or partnership interests
Identify and describe the types of capital also find the weights of each type of capital within the capital structure. Also explain what does cost of capital mean and why it is important for companies to find their cost of capital.
(5) Estimate the Weighted Average Cost of Capital (WACC): Next, find the cost of capital for each of the type of capital within the capital structure of the company. Many of the variables required will come from the firm’s financial statements. However, you will also need to use additional data sources like yahoo.finace.com or Morningstar.com to get information like the YTM, required returns on stock, risk or beta factor of the firm, risk free rate, growth estimates etc. Using the weights of each type of capital find the WACC.
(6) Capital Budgeting Techniques: Assume an investment proposal and develop a cash flow projection for the same. Make the necessary assumptions and clearly state each one them, like the life of the investment project, initial investment and the net cash flows. Apply any two capital budgeting techniques to evaluate the proposal.
(7) Working Capital management: Discuss the areas of working capital management and identify the ways in which inventory, accounts receivable and cash could be efficiently managed.
(8) Recommendation and Conclusion: Explain the decision criteria to make the investment selection and conclusion.
(9) Other important points:
· Prepare the report using table of contents, appropriate headings, and sub-headings as required.
· You are required to show all the data used in your work.
· Provide appropriate references to show the source of data used in your work.
· Attach the main financial statements of the company used in your work for at least two years.
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Revised Jan 2020