Your final project for this course is to prepare a financial analysis. This final project takes a close look at two corporations, Bayer and Monsanto. Bayer is considering a bid for United States seed company Monsanto (Snider, 2016). For purposes of this project, you will act as the Chief Financial Officer of Monsanto Corporation, analyzing financial documents and determining whether Monsanto should indeed go forward with acceptance of the purchase.
project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. Preliminary milestones will be submitted in Modules Four and Six. The final submission will occur in Module Eight.
Evaluation of the Proposal
Due in Module 4
Evaluation of an Alternative Opportunity
Due in Module 6
Final Project Submission
Due in Module 8
In this assignment you will demonstrate your mastery of the following course outcomes:
Analyze financial reports to determine a firm’s performance.
Apply the strategic planning processes necessary to manage the long- and short-term financial activities of the firm.
Perform valuation of financial instruments.
Evaluate the appropriateness of an investment using applicable economic, industry, and competitive analysis.
Milestone 2: Evaluation of an Alternative Opportunity
Before completing this assignment, review the Final Project Document. Background information found in the Final Project Document applies to Milestones 1 through 3.
As an alternative proposal means of increasing shareholder value, you have also been asked to evaluate Monsanto’s intent to expand its operations to pesticide production, which is expected to yield a sales increase of $3,950,000. There is no excess capacity, and the increase in fixed asset needs would be equal to 70% of this increase in sales, while cost of sales would run 20% of sales, using a percentage of sales approach. Assume that Monsanto issues dividends at a rate of 1.98% of net sales, and thus the firm’s retention ratio is 98.2%. Current sales are projected to be $15,239,000. Assume that the proposed project has a risk and weighted average cost of capital similar to that of Monsanto, and a firm beta similar to that of Monsanto.
The extent to which Monsanto will have to take on additional debt, given that it wishes to retain its current dividend ratio and does not wish to sell additional equities.
Calculate the firm’s sustainable growth rate and internal growth rate and use these measures to analyze a decision to accept this alternative proposal. Use these measures and concepts covered in assigned readings including EFN, DuPont Identity and leverage, Modules One through Six, to explain the importance of these measures to shareholder interests.
At the end of your draft, include questions and challenges that you experienced with this milestone.
Prepare your Evaluation of an Alternative Opportunity in a 2–4 page double-spaced document using 12 pt. Times New Roman font. Use APA formatting.
Compose your work in a .doc or .docx file type using a word processor (such as Microsoft Word, etc.) and save it frequently to your computer. For those assignments that are not written essays and require uploading images or PowerPoint slides, please follow uploading guidelines provided by your instructor.
Check your work and correct any spelling or grammatical errors. When you are ready to submit your work, click “Upload Submission.” Enter the submission title and then click on “Select a file to upload.” Browse your computer, and select your file. Click “Open” and verify the correct file name has appeared next to Submission File. Click on “Continue.” Confirm submission is correct and then click on “Accept Submission & Save.”