Student to complete
Student Name: Student Number:
Assignment: EFB343 Individual Assignment – Valuation Project
Due Date: XXXXXXXXXXDay and Time of Class:
DECLARATION: By submitting this assignment I declare that:
· This work is entirely my own, and no part of it has been copied from any other person’s work, words or ideas, except as specifically acknowledged through the use of inverted commas and in-text references;
· No part of this assignment has been written for me by any other person except where such collaboration has been authorised by the Unit Coordinator concerned; I understand my assignment may be scanned as part of the assessment process, and that plagiarism detection software may be utilised;
· This assignment has not been submitted for any other unit at QUT or any other institution, unless authorised by the relevant Unit Coordinator;
· I have read and abided by all of the requirements set down for this assignment.
· If the above declaration is found to be false, you may receive reduced or zero marks for this assignment, and you will be dealt with under QUT’s Student Rule No. 29 - Academic Dishonesty, and the associated procedures for Academic Dishonesty which are available at:
http://www.qut.edu.au/admin/mopp/Appendix/append01cst.html#Rule29 and http://www.qut.edu.au/admin/mopp/C/C_09_07.html
I acknowledge that I have read all the instructions on this declaration sheet.
EFB343: CORPORATE FINANCE2021, Sem 1
Assignment: Valuation Project
Due date: May 17, 2021 at 11:59 p.m., Brisbane time.
1. The purpose of this project is to explore the dynamics of corporate valuation used in M&As and understand the information retrieval process, the limitations of valuation methods, and the impact of uncertainty on corporate valuation. The project is designed to help you build research abilities, analytical and time management skills.
2. Marks: 40 – You must have the correct answer and a correct explanation to gain the full marks allocated to each question. Failure to do so will result in a mark of zero for the question. Be sure to format your Excel file in a reasonably clear way, so that someone who was given the same job after you would be able to understand your working and replicate what you have done. Ambiguous answers and contradictory statements will be penalised.
3. The project must be done in Excel. Use the Excel template provided. Do all the assignment with explanations in excel and upload one file. Type your explanation in text boxes.
4. Format: Calculation or short answer with explanation.
5. Word Limit: 800 words as a very rough guide mostly calculations.
6. In-text citation and reference list are expected if you have incorporated other people’s views into your work. Common knowledge, your own ideas or findings do not need a reference.
7. The assignment must be done in Excel (scanned hand-written answers are not acceptable).
8. Upload a soft copy of your Excel file to Blackboard under Assessment by the due date and time. Failure to upload will result in a mark of zero.
9. You can submit multiple times up until the due date, upon which the submission links will close. Only the last attempt will be graded.
10. Late assignment + No extension = 0 as per QUT policy.
11. A hard copy is not required. Keep a copy for yourself.
12. To avoid mixing up assignments, name your assignment using the following format:
XXXXXXXXXXunit code, your name, your student number, and the assignment
XXXXXXXXXXfor example: EFB343 Doe John n XXXXXXXXXXAssignment
XXXXXXXXXXSave your file using this name and then upload it to Blackboard.
13. Finally, this cover sheet will form the first page of the document you submit. By submitting this document, you are agreeing to the declaration on the left-hand side at the top of this worksheet.
(a) Calculate Target's cost of equity using CAPM. (2 marks)
(b) Calculate Target's cost of debt. XXXXXXXXXX2 marks)
(c) Calculate Target's WACC. XXXXXXXXXX2 marks)
Type your explanations here.
FCFF and Value
(d) Provide a thorough justification for your choice of the growth rate after year 4. Clearly state any other assumptions you have made XXXXXXXXXXmarks)
(e) Estimate the years 1-4 free cash flow and the terminal value at the end of year 4. XXXXXXXXXX12 marks)
(f) Find the value of Target. XXXXXXXXXX3 marks)
Type the explanation for your choice of the growth rate after year 4 and additional assumptions here.
(g) Compare your valuation with the current share price of Target Corporation (as of today). Based on your evaluation, would you conclude that the company’s stock is overvalued or undervalued? XXXXXXXXXX3 marks)
(h) How would your conclusion in part (g) affect Amazon’s incentive to acquire Target? XXXXXXXXXX2 marks)
Type your discussion here. 100 words as a very rough guide.
(i) Determine how sensitive your valuation is to a ±1% change in the sales growth rate, i.e., the average sales growth rate over the last 4 years. Discuss the impact of such changes on your conclusion. XXXXXXXXXX5 marks)
Type your discussion here.
(j) Discuss any limitations of your analysis. Your discussion should include a critical evaluation of your assumption(s) and those of your lead partner, especially those in relation to the use of the historical data for year 2020. XXXXXXXXXX6 marks)
Type your discussion here. Additional calculations/analyses are NOT required. Discussion only. 300 words as a very rough guide.
References (if any)
In-text citation and reference list are expected if you have incorporated other people’s views into your work. Common knowledge, your own ideas or findings do not need a reference.