ACCT6004 Finance Session 3, 2021 Assessment 2: Business Case Studies 1

ACCT6004 Finance Session three, 2021 Evaluation 2: Enterprise Case Research 1 Due date: 17 December 2021, 11PM (AEDT) Normal overview This task has a 25% weighting in your total mark for this unit and focuses on content material from Matters three, four and 5. It will likely be marked out of 25. Your task submission will include a phrase doc that ought to not exceed 1,500 phrases (excluding the reference listing). Total, the task consists of: a. 6 (six) questions on time worth of cash and bond valuation (half 1); b. three (three) duties as a part of a danger and return evaluation (components 2 and three). Directions: Do NOT embrace a coversheet in your evaluation doc. Your particulars are identified to us as a result of you submit electronically by means of your login. You could have been assigned an ASX listed firm because the context for this task. The corporate you will use is Bega Cheese, ASX code (BGA). Additionally, you will obtain a spreadsheet to help you in finishing half 1 of the evaluation. This spreadsheet might be situated within the Evaluation 2 folder underneath the Evaluation Duties and Submission tab on the unit blackboard web site. All enter information it's essential to discover for calculations partly 2a of this task have to be sourced from S&P Capital IQ. This database can even give you helpful data for basic background analysis on the corporate, To make use of this database, you will want to use for a consumer account. Directions and the hyperlink to the database might be discovered within the Net Hyperlinks part of this unit’s MySCU web site. Please learn these directions rigorously and set your account up early within the session. Try every of the next sections in your task submission: 1. TVM and bond valuation questions (1 mark every, give solutions to 2 decimal locations): a. Bega Cheese (BGA) has determined to buy a brand new asset essential for a proposed growth to its enterprise. The corporate has determined to talk with their financial institution. The financial institution is providing a set fee of two.55% APR, compounded quarterly. BGA is required to make funds quarterly as proven within the spreadsheet each quarter for 10 years. What quantity will BGA be required to borrow? b. Check with the spreadsheet for the annual working income of BGA. Assume this income will develop constantly on the annual fee proven within the spreadsheet. What's your prediction for annual working income for BGA in 5 years? c. BGA needs to take a position funds and has a number of choices out there to it. The funding choices are X, Y and Z. All three of those choices have equal danger. The rates of interest (EAR) for these choices are given within the spreadsheet. What's the EAR of the funding choice BGA ought to select? Evaluation 2: Enterprise Case Research I ACCT6004 S3 2021 2 d. BGA is shopping for new property for the quantity supplied within the spreadsheet. To finance this, the BGA’s financial institution has provided an amortised mortgage at 2.55% APR, quarterly compounding, with 30 years of quarterly funds. What quarterly cost will BGA must make on this mortgage? Assume that the whole property price is financed and that funds are made on the finish of every interval. e. BGA has a difficulty of $1000 par worth annual coupon bonds with 11 years remaining till maturity. The annual coupon fee is given within the spreadsheet, together with the present worth of the bonds. What's the yield to maturity on the bonds? f. BGA has a difficulty of $100 par worth bonds that provides an annual coupon fee (situated within the spreadsheet) paid semi-annually. The bonds have Eight years remaining till maturity. The market’s required return on these bonds is supplied within the spreadsheet. What's the quantity of every coupon cost? 2. Danger and return estimates (four marks): a. Use CAPM to estimate the anticipated return for the shares of: i) Bega Cheese Ltd; and ii) a hypothetical firm known as Flyaway with a beta of 1.20. To do that, use the yield to maturity of a 10-year Australian Authorities bond on 26 November 2021 as a proxy for the risk-free fee, assume the market danger premium is three.50% and use the BGA’s most up-to-date 5-year beta. b. Utilizing the info from half 2a, estimate portfolio anticipated return and beta, assuming a portfolio made up of Bega Cheese and Flyaway with 40% invested in Bega Cheese Ltd and 60% invested in Flyaway. three. Danger and return evaluation (15 marks): a. Interpret and focus on your danger and return measures from components 2a and 2b. Marking Standards: The reply --- to every TVM and bond valuation query partly 1 can be marked as right (1 mark) or incorrect (zero marks). Give your closing reply to every of the 6 questions on a separate line within the first part of your task submission. Give all solutions to the closest two decimal locations. No half marks are supplied so it will be important that you just spherical your decimals accurately. Elements 2 and three can be marked utilizing the rubric that follows --- Evaluation 2: Enterprise Case Research 1 ACCT6004 Finance Session three, 2021 The deadline is December 17, 2021, at 11 p.m. (AEDT) a broad overview This task counts for 25% of your total grade for this course and covers content material from Matters three, four, and 5. It will likely be graded on a scale of 1 to 25. Your task can be submitted as a phrase doc with a phrase depend of not more than 1,500 phrases (excluding the reference listing). The task is split into two components: a. six (six) questions on time worth of cash and bond valuation (half one); and b. three (three) duties as a part of a danger and return evaluation (components 2 and three). Directions: In your evaluation paper, don't add a coversheet. We've got entry to your data because you present it on-line by means of your login. Because the context for this mission, you have been given an ASX listed agency. Bega Cheese (ASX code: BEGA) is the agency you'll use (BGA). You will additionally get a spreadsheet that can assist you do the primary part of the evaluation. This spreadsheet could also be discovered within the Evaluation 2 folder on the unit blackboard web site, underneath the Evaluation Duties and Submission tab. The entire information you may want for part 2a of this task's calculations should come from S&P Capital IQ. This database can even give you with vital data for conducting basic firm analysis. To entry this database, it's essential to first create a consumer account. The Net Hyperlinks part of this unit's MySCU web site has directions and a hyperlink to the database. Please rigorously research these directions and arrange your account as quickly as doable all through the session. In your task submission, attempt every of the next sections: 1. 1 mark every for TVM and bond valuation questions (present solutions to 2 decimal locations): a. Bega Cheese (BGA) has determined to buy a brand new asset that's required for an anticipated enterprise growth. The enterprise has opted to contact their financial institution. A set fee of two.55 p.c APR, compounded quarterly, is accessible from the financial institution. BGA is predicted to make funds each quarter for the subsequent ten years, as proven within the spreadsheet. How a lot cash will BGA must borrow? c. Lookup BGA's annual working income on the spreadsheet. Assume that the income will proceed to rise on the annual tempo indicated within the spreadsheet. What do you assume BGA's annual working income can be in 5 years? c. BGA is trying to make investments cash and has quite a few decisions. X, Y, and Z are the investing alternate options. All three options carry the identical degree of danger. Within the spreadsheet, the rates of interest (EAR) for numerous decisions are listed. What's the anticipated annual return (EAR) of the funding selection BGA ought to choose? ACCT6004 S3 2021 ACCT6004 S3 2021 ACCT6004 S3 2021 ACCT6004 S3 2021 ACCT6004 S 2 d. BGA is buying new actual property for the value specified within the spreadsheet. The BGA's financial institution has provided an amortised mortgage with a 2.55 p.c annual proportion fee, quarterly compounding, and 30 years of quarterly funds to fund this. What's the quantity of the quarterly cost that BGA can be required to make on this mortgage? Assume that the whole price of the property is roofed by insurance coverage and that funds are made on the finish of every interval. e. BGA has a $1000 par worth annual coupon bond concern with an 11-year maturity date. What's the yield to maturity on the bonds? The annual coupon fee is offered within the spreadsheet, together with the present worth of the bonds. f. BGA has a $100 par worth bond concern with a semi-annually paid yearly coupon fee (included within the spreadsheet). The bonds have an Eight-year maturity interval. The spreadsheet contains the market's essential return on these bonds. How a lot does every coupon cost price? 2. Estimates of danger and return (four factors): a. Calculate the anticipated return for the shares of: I Bega Cheese Ltd; and ii) Flyaway, a hypothetical firm with a beta of 1.20. To take action, use the yield to maturity of a 10-year Australian Authorities bond on November 26, 2021 as a proxy for the risk-free fee, assume a three.50 p.c market danger premium, and the BGA's most up-to-date 5-year beta. b. Estimate portfolio anticipated return and beta utilizing the info from part 2a, assuming a portfolio made up of Bega Cheese and Flyaway, with 40% invested in Bega Cheese Ltd and 60% in Flyaway. three. Danger and return evaluation (15 factors): a. Interpret and analyze the danger and return measures you calculated in components 2a and 2b.
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