ACCT6004 Finance Session three, 2021
Assessment 2: Business Case Studies 1
Due date: 17 December 2021, 11PM (AEDT)
Basic overview
This task has a 25% weighting in your general 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 encompass 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 Assessment (components 2 and three).
Directions:
Do NOT embody a coversheet in your Assessment doc. Your particulars are recognized to us since you submit electronically by your login.
You could have been assigned an ASX listed firm because the context for this task. The corporate you’ll use is Bega Cheese, ASX code (BGA). Additionally, you will obtain a spreadsheet to help you in finishing half 1 of the Assessment. This spreadsheet could be positioned within the Assessment 2 folder underneath the Assessment Duties and Submission tab on the unit blackboard website.
All enter information it is advisable to discover for calculations partially 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 could be discovered within the Internet Hyperlinks part of this unit’s MySCU website. Please learn these directions fastidiously 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 needed for a proposed enlargement to its enterprise. The corporate has determined to talk with their financial institution. The financial institution is providing a hard and fast price 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. Seek advice from the spreadsheet for the annual working income of BGA. Assume this income will develop constantly on the annual price 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 accessible 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 possibility BGA ought to select?
1
Assessment 2: Business Case Studies I ACCT6004 S3 2021 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 your complete property value 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 price is given within the spreadsheet, together with the present value 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 price (positioned 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 price, assume the market danger premium is three.50% and use the BGA’s most up-to-date 5-year beta.
b. Utilizing the information 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 Assessment (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 Question Assignment partially 1 will likely be marked as appropriate (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 significant that you just spherical your decimals appropriately.
Components 2 and three will likely be marked utilizing the rubric that follows.
2
Assessment 2: Business Case Studies I ACCT6004 S3 2021
Marking standards for danger and return estimates (Half 2)
MARKING CRITERIA Wonderful Very Good Good Passable Poor
Correct calculation of anticipated returns for firms and portfolio and correct calculation of portfolio beta (Duties 2a and 2b: four marks) Appropriate enter information used. Method and all closing calculated figures are appropriate
(four marks) Principally appropriate enter information. Appropriate methods and calculations. (three.5 marks) Appropriate enter information. Principally appropriate methods and calculations. (2.5 marks). Principally appropriate enter information. Principally appropriate methods and calculations. (2 marks). Principally incorrect information and methods. (zero to 1.5 marks)
Marking standards for written danger and return Assessment and its presentation (Half three)
MARKING CRITERIA Wonderful Very Good Good Passable Poor
Insightful and related dialogue of danger and return ( 10 marks) Precisely and comprehensively interprets all calculated danger and return
measures. Appropriately compares acceptable measures and explains variations, drawing on related idea. Precisely weaves related context (e.g. firm trade, market circumstances) into explanations. Makes use of tables or graphs successfully to boost the dialogue. Makes use of and explains related technical phrases. (9 to 10 marks) Precisely interprets practically all calculated danger and return
measures. Appropriately compares acceptable measures and explains variations, drawing on related idea. Weaves related context into explanations. Makes use of tables or graphs successfully to boost the dialogue. Makes use of and explains most related technical phrases. (eight marks) Precisely interprets most calculated danger and return measures. Appropriately compares acceptable measures and explains some variations, drawing on related idea. Incorporates some related context. Makes use of tables or graphs however is probably not efficient or defined. Makes use of and explains some technical phrases. (7 marks) Precisely interprets most calculated danger and return measures. Appropriately compares some acceptable measures and explains some variations. Tables or graphs, if used, is probably not efficient or defined. Makes use of and explains some technical phrases. Context and idea are restricted or incorrect (5 to
6 marks) Whereas an evidence of technical phrases might have been tried, there’s little or no correct interpretation or comparability of danger and return measures. Context, idea and explanations are restricted, incorrect or absent. (zero to four marks)
Presentation, sources and written expression
(5 marks) Total presentation is properly organised and appears skilled. All information sources and different references are supplied the place wanted in acceptable format and element. Use of language makes which means persistently clear. There are not any or very
few grammar, syntax and
spelling errors. (5 marks) Total presentation is generally well-organised and professional. All needed information sources and different references are supplied, principally in acceptable positions, format and element. Use of language makes which means persistently clear. There are only a few grammar, syntax and spelling errors. (four marks) Total presentation is generally well-organised and neat. All needed information sources and different references are supplied, principally in acceptable positions, format and element. Use of language principally makes which means clear. There could also be a number of grammar, syntax and spelling errors. (three.5 marks) Total presentation is pretty neat and organised. Not all needed information sources are supplied or most usually are not in acceptable positions, format and element. Use of language principally makes which means clear. There are a number of grammar, syntax and spelling errors. (2.5 marks) Total presentation is mostly unprofessional. Not all needed information sources are supplied or most usually are not in acceptable positions, format and element. Use of language usually makes which means unclear. There could also be many grammar, syntax and spelling errors. (zero to 2 marks)
—
This task is price 25% of your general grade for this course and covers subjects three, four, and 5. It will likely be 25 factors. Your undertaking will likely be a phrase doc of not more than 1500 phrases (excluding the reference listing).
The task contains:
(half 1) questions on time worth of cash and bond valuation
three (three) duties in a risk-reward Assessment (components 2 and three).
Directions:
Your Assessment doesn’t want a coversheet. We’ve got your particulars since you submit electronically by way of your login.
This task’s context is an ASX listed agency. Bega Cheese, ASX code (BGA). Additionally, you will be capable to obtain a spreadsheet that will help you full Half 1. To entry this spreadsheet, go to the Assessment 2 folder on the unit blackboard website.
All enter information for computations in part 2a should come from S&P Capital IQ. This database can even Help you to with basic firm analysis.
To make the most of this database, you have to first register. The database connection and directions are within the Internet Hyperlinks part of this unit’s MySCU website. Arrange your account early within the session.
Embody the next sections in your task:
1. TVM and bond valuation questions (1 mark every):
a. Bega Cheese (BGA) has opted to purchase a brand new asset for a possible enterprise progress. The agency has chosen to contact their financial institution. The speed is 2.55 % APR, compounded quarterly. BGA should make quarterly funds as specified within the spreadsheet for ten years. How a lot will BGA must borrow?
Lookup BGA’s annual operational income on the spreadsheet. On this case, assume the annual price of progress stays fixed. What do you see BGA’s yearly working income in 5 years?
c. BGA needs to take a position cash and has quite a few potentialities. Put money into X, Y, or Z. These three choices are all dangerous. The spreadsheet reveals the EAR for numerous options. What’s the EAR of BGA’s funding possibility?
