Posted: January 28th, 2022

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

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 total mark for this unit and focuses on content material from
Matters three, four and 5. Will probably 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 threat and return Assessment (components 2 and three).
Directions:
Do NOT embody a coversheet in your Assessment doc. Your particulars are recognized to us as a result of
you submit electronically by means of your login.
You will 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 Assessment. This spreadsheet will be positioned within the Assessment 2 folder
below the Assessment Duties and Submission tab on the unit blackboard website.
All enter information you might want to discover for calculations partly 2a of this task should be sourced from S&P
Capital IQ. This database will even offer you helpful info for basic background
analysis on the corporate,
To make use of this database, you’ll need to use for a consumer account. Directions and the hyperlink to the
database will be discovered within the Internet Hyperlinks part of this unit’s MySCU website. 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 obligatory for a proposed growth
to its enterprise. The corporate has determined to talk with their financial institution. The financial institution is providing a set
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. Confer with the spreadsheet for the annual working income of BGA. Assume this income will
develop repeatedly 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 speculate funds and has a number of choices obtainable to it. The funding choices are
X, Y and Z. All three of those choices have equal threat. 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?
Assessment 2: Business Case Studies I ACCT6004 S3 2021
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d. BGA is shopping for new property for the quantity supplied within the spreadsheet. To finance this, the
BGA’s financial institution has supplied an amortised mortgage at 2.55% APR, quarterly compounding, with 30
years of quarterly funds. What quarterly fee will BGA must make on this mortgage?
Assume that the complete property value is financed and that funds are made on the finish of
every interval.
e. BGA has a problem 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 worth of
the bonds. What’s the yield to maturity on the bonds?
f. BGA has a problem 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 fee?
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 referred to 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 threat 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 Assessment (15 marks):
a. Interpret and focus on your threat and return measures from components 2a and 2b.
Marking Standards:
The reply —
to every TVM and bond valuation Question Assignment partly 1 will likely be marked as right (1 mark) or
incorrect (zero marks).
Give your remaining 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 is crucial that you just spherical your decimals appropriately.
Components 2 and three will likely be marked utilizing the rubric that follows
—
Assessment 2: Business Case Studies 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. Will probably be graded on a scale of 1 to 25. Your task will likely 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 threat and return Assessment (components 2 and three).
Directions: In your Assessment paper, don’t add a coversheet. We’ve entry to your info because you present it on-line by means of your login.
Because the context for this venture, you’ve got been given an ASX listed agency. Bega Cheese (ASX code: BEGA) is the agency you’ll use (BGA). You may additionally get a spreadsheet that will help you do the primary part of the Assessment. This spreadsheet could also be discovered within the Assessment 2 folder on the unit blackboard website, below the Assessment Duties and Submission tab.
The entire information you will want for part 2a of this task’s calculations should come from S&P Capital IQ. This database will even give you with necessary info for conducting basic firm analysis.
To entry this database, you should first create a consumer account. The Internet Hyperlinks part of this unit’s MySCU website 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 hard and fast price of two.55 % APR, compounded quarterly, is out there from the financial institution. BGA is predicted to make funds each quarter for the following ten years, as proven within the spreadsheet. How a lot cash will BGA must borrow?
c. Search for 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 will likely be in 5 years?
c. BGA is trying to make investments cash and has quite a lot of selections. X, Y, and Z are the investing options. All three options carry the identical stage of threat. Within the spreadsheet, the rates of interest (EAR) for numerous selections are listed. What’s the anticipated annual return (EAR) of the funding alternative BGA ought to choose?
ACCT6004 S3 2021 ACCT6004 S3 2021 ACCT6004 S3 2021 ACCT6004 S3 2021 ACCT6004 S
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d. BGA is buying new actual property for the worth specified within the spreadsheet. The BGA’s financial institution has supplied an amortised mortgage with a 2.55 % annual proportion price, quarterly compounding, and 30 years of quarterly funds to fund this. What’s the quantity of the quarterly fee that BGA will likely be required to make on this mortgage?
Assume that the complete value 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 situation with an 11-year maturity date. What’s the yield to maturity on the bonds? The annual coupon price is introduced within the spreadsheet, together with the present worth of the bonds.
f. BGA has a $100 par worth bond situation with a semi-annually paid yearly coupon price (included within the spreadsheet). The bonds have an Eight-year maturity interval. The spreadsheet consists of the market’s obligatory return on these bonds. How a lot does every coupon fee value?
2. Estimates of threat 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 price, assume a three.50 % market threat 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 Assessment (15 factors): a. Interpret and analyze the danger and return measures you calculated in components 2a and 2b.

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