FINC 2011 Major Assignment Marking

The University of Sydney Business School Finance Discipline

FINC 2011 Corporate Finance 1

Major Assignment

Due Date: 4pm, Monday 27 May, 2013

ASX-listed Company Valuation Report This report requires you to undertake a valuation exercise on an Australian Security Exchange (ASX) listed company. You are required to use the models presented in the course to calculate a share price for the company and then make a recommendation to clients about whether they should invest in the selected company. Required:

1. Selected a publicly listed company on the ASX that has previously made dividend payments.

2. Calculate an expected perpetual growth rate for the company’s dividends. With reference to appropriate academic literature, justify your forecast.

3. Forecast the amount of the next dividend payment. 4. Using the CAPM model calculate an appropriate required rate of return for the

shareholders of the company. With reference to appropriate academic literature, justify your value (Please note you are not required to calculate the beta yourself – you may use any reputable published number).

5. Determine the expected current share price using the constant dividend growth model.

6. On the basis of YOUR valuation what course of action would you recommend to your clients with respect to investing in this security? What caveats might you lace on this recommendation? Why?

Formatting and Presentation:

a. The assignment should be no more than 12 pages, with 1.5 line spacing and

size 12 Times New Roman or Arial Font. Marks will be reduced by 10% for each page that the assignment exceeds 12 pages. Hence your mark will be reduced to zero if the assignment exceeds 22 pages. Brevity and conciseness

are key ingredients of a highly successful report. You will be penalised for inappropriate formatting.

b. Make sure you use proper referencing in your assignment. All essays must include a list of references in academic form using the author - date (Harvard) citation style. You will be penalised if you use inappropriate referencing.

c. Pay particular attention to presentation. A significant component of your mark will be based on presentation. Avoid overdoing formatting, and ensure that the assignment is very clear, logical and professional. Pay attention to grammar. Clear and logical presentation is a major challenge in assignment preparation. Preparing a concise assignment is another major challenge. Every part of the assignment should somehow add to the end result otherwise it is superfluous and distracting. Page limit for assignment – 12 pages

d. All data used in the assignment MUST be included in the appendix. You will be penalised to failure to include all data used.

What’s included in the 12 page limit? - Executive summary - Assignment body - Tables - Diagrams What’s excluded from the 12 page limit? - Title page - References - Appendices