Assignment Instructions
FIN515 Managerial Finance
First Course Project

The purpose of this project is to help you develop skills not only in performing the calculations behind financial analysis but in interpreting the numbers as well. You are to pick a company. You should pick
one either from the industry in which you are currently working or an industry in which you are interested. You could also pick a division of a company. It is imperative that sufficient data about your company are available and that you use the data. One way to be sure is to pick a publicly held company. If you pick a privately held company or a division of a company, make sure that the data necessary to do a significant financial analysis are available. If you use data that are not publicly available, be sure to talk to your manager and to make absolutely sure that revealing that data is not a problem. You will also need to find a standard against which to compare your findings. This could be a different company in the same industry or the same company at a different time. Additionally, average or benchmark numbers are available for several industries. If you decide to use a different company in the same industry or the same company at a different time, make sure that there are enough differences between the two to make a meaningful analysis. After you have selected a company, put yourself in the place of an analyst who has been asked to perform an analysis of the company and to provide a recommendation to management. Use ratio analysis, common size analysis, or other techniques to determine areas in which the company is doing well and areas that management should look at. Then, present your analysis and recommendations in the form of a paper. A good place to start would be to perform a complete DuPont analysis of the company, and compare it to the standard. The DuPont analysis might provide guidance as to what particular areas of the company should be examined next and what ratios should be calculated. If the DuPont analysis does not reveal anything useful, you might wish to calculate several of the ratios that are available to you.

Deliverable

The completed paper should be about 1,000 words. In the paper, you do not have to explain the ratios in depth. You may assume that the reader has a basic understanding of finance and knows what ratio analysis is, although he or she might not be able to list all the ratios and how to calculate them from memory. The reader is not going to want a lot of background about financial analysis. He or she really wants information that he or she can apply to the given situation, which is the company that you have
selected. If you like, you can write the paper in the form of a memo to management. You do not have to cite your source for how to calculate the ratios. You do need to provide a reference to where you got that data for your subject company and for the other company or standard to which you compared your company.

The spirit of this assignment is for you to calculate and interpret results. The purpose is not for you to
find calculations and interpretations that have been done by someone else. The paper is expected to
conform to the standards for graduate school writing.

The purpose of your analysis is internal evaluation. Refrain from using stock market valuation ratios.
When you have completed the project, place it in one Word document, and place that document in the appropriate Dropbox.

Second Project

The purpose of this project is for you to have some practice working with financial concepts in the real world. This will involve integrating some material from throughout the course. The project will
also involve the development of your own approach to doing the work. The project does not provide a step-by-step procedure for you to follow.Your task is to determine the WACC for a given firm using what you know about WACC as well as data you can find through research. Your deliverable is to be a brief report in which you state your determination of WACC, describe and justify how you determined the number, and provide relevant information as to the sources of your data.With the help of your professor, you have selected a company for which to research and find the WACC. Your research is to be independent from any information you may find at thatswacc.com or similar sites, although you might want to use such sites to provide a reasonableness check on the WACC that you calculate.AssumptionsAs you recall, the formula for WACC is rWACC = (E/E+D) rE + D/(E+D) rD(1-TC)The formula for the required return on a given equity investment isri= rf + ?i * (RMkt-rf)RMkt-rfis the Market Risk Premium. For this
project, you may assume that the Market Risk Premium is 4%, unless you can develop a better number.rfis the risk-free rate. The YTM on 10-year U.S. Treasury securities is a good approximation.You may assume a corporate tax rate of 40%.One good source for financial data for companies as well as data about their equity is.yahoo.com/”>http://finance.yahoo.com. By looking around this site, you should be able to find the market capitalization (E) as well as the ? for any publicly traded company.There are not many places left where data about corporate bonds is still available. One of them is morningstar.com/BondCenter”>http://finra-markets.morningstar.com/BondCenter. To find data for a particular companys bonds, find the Quick Search feature. Then, be sure to specify corporate bonds and type in the name of the issuing company. This should give you a list of all of the companys outstanding bond issues. Clicking on the symbol for a given bond issue will lead you to the current amount outstanding and the yield to maturity. You are interested in both. The total of all bonds outstanding is
D in the above formula.If you like, you can use the YTM on a bond issue that is not callable as the pre-tax
cost of debt for the company.Deliverable Write a two or three page report that contains the following elements:1. Your calculated WACC2. How data were used to calculate WACC. This would be the formula and the formula with your values substituted.3. Sources for your data.4. A discussion of how much
confidence you have in your answer. What were the limiting assumptions that you made, if any?

Second Project

The purpose of this project is to help you develop skills not only in performing the calculations behind financial analysis but in interpreting the numbers as well.You are to pick a company. You should pick
one either from the industry in which you are currently working or an industry in which you are interested. You could also pick a division of a company. It is imperative that sufficient data about your company are available and that you use the data. One way to be sure is to pick a publicly held company. If you pick a privately held company or a division of a company, make sure that the data necessary to do a significant financial analysis are available.If you use data that are not publicly available, be sure to talk to your manager and to make absolutely sure that revealing that data is not a problem.You will also need to find a standard against which to compare your findings. This could be a different company in the same industry or the same company at a different time. Additionally, average or benchmark numbers are available for several industries. If you decide to use a different company in the same industry or the same company at a different time, make sure that there are enough differences between the two to make a meaningful analysis.After you have selected a company, put yourself in the place of an analyst who has been asked to perform an analysis of the company and to provide a recommendation to management.Use ratio analysis, common size analysis, or other techniques to determine areas in which the company is doing well and areas that management should look at. Then, present your analysis and recommendations in the form of a paper. A good place to start would be to perform a complete DuPont analysis of the company, and compare it to the standard. The DuPont analysis might provide guidance as to what particular areas of the company should be examined next and what ratios should be calculated. If the
DuPont analysis does not reveal anything useful, you might wish to calculate several of the ratios that are available to you.The completed paper should be about 1,000 words. In the paper, you do not have to explain the ratios in depth. You may assume that the reader has a basic understanding of finance and knows what ratio analysis is, although he or she might not be able to list all the ratios and how to calculate them from memory. The reader is not going to want a lot of background about financial analysis. He or she really wants information that he or she can apply to the given situation, which is the company that you have selected. If you like, you can write the paper in the form of a memo to management. You do not have to cite your source for how to calculate the ratios. You do need to
provide a reference to where you got that data for your subject company and for the other company or standard to which you compared your company. The spirit of this assignment is for you to calculate and interpret results. The purpose is not for you to find calculations and interpretations that have been done by someone else. The paper is expected to conform to the standards for graduate school writing.
The purpose of your analysis is internal evaluation. Refrain from using stock market valuation ratios.When you have completed the project, place it in one Word document, and place that document in the appropriate Dropbox.The purpose of this project is for you to have some practice working with financial concepts in the real world. This will involve integrating some material from throughout the course. The project will also involve the development of your own approach to doing the work. The
project does not provide a step-by-step procedure for you to follow.Your task is to determine the WACC for a given firm using what you know about WACC as well as data you can find through research. Your deliverable is to be a brief report in which you state your determination of WACC, describe and justify how you determined the number, and provide relevant information as to the sources of your data.With the help of your professor, you have selected a company for which to research and find the WACC. Your research is to be independent from any information you may find at thatswacc.com or similar sites, although you might want to use such sites to provide a reasonableness check on the WACC that you calculate.

Assumptions

As you recall, the formula for WACC is rWACC = (E/E+D) rE + D/(E+D) rD(1-TC)The formula for the required return on a given equity investment isri= rf + ?i * (RMkt-rf)RMkt-rfis the Market Risk Premium. For this project, you may assume that the Market Risk Premium is 4%, unless you can
develop a better number.rfis the risk-free rate. The YTM on 10-year U.S. Treasury securities is a good approximation.You may assume a corporate tax rate of 40%.One good source for financial data for companies as well as data about their equity is.yahoo.com/”>http://finance.yahoo.com. By looking around this site, you should be able to find the market capitalization (E) as well as the ? for any publicly traded company.There are not many places left where data about corporate bonds is still available. One of them is.morningstar.com/BondCenter”>http://finra-markets.morningstar.com/BondCenter. To find data for a particular companys bonds, find the Quick Search feature. Then, be sure to specify corporate bonds and type in the name of the issuing company. This should give you a list of all of the companys outstanding bond issues. Clicking on the symbol for a given bond issue will lead you to the current amount outstanding and the yield to maturity. You are interested in both. The total of all bonds outstanding is
D in the above formula.If you like, you can use the YTM on a bond issue that is not callable as the pre-tax
cost of debt for the company.

Deliverable

Write a two or three page report that contains the following elements:1. Your calculated WACC2. How data were used to calculate WACC. This would be the formula and the formula with your values substituted.3. Sources for your data.4. A discussion of how much confidence you have in your answer. What were the limiting assumptions that you made, if any?

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