Corporate financial managers must have a business-wide perspective to successfully navigate the corporate environment. The skills you develop in this course will support you in your future business career. Your final project for FIN 330 will allow you to showcase your skills with the quantitative and qualitative concepts of corporate finance and leadership that a finance professional must obtain. It will require you to analyze a real-world corporation from a quantitative perspective. You will also investigate the challenges and decisions a manager must face.
In this milestone, you will continue to work on elements of the Final Project, the corporation valuation report.
Directions
This milestone requires you to write a draft of the Capital Structure and Valuation sections (Sections III and IV) of the Final Project, the corporate valuation report. In this assignment, you will use the same corporation you focused on in Milestone One to expand upon the capital structure of the organization. You will also address the valuation of the corporation through forecasting.
Specifically, you must address the following rubric criteria:
Capital Structure: This third section of your report discusses the capital structure of the corporation. Specifically, you must address:
Outline the most recent year’s debt, equity, and total capital to show the overall capital structure of the corporation using the provided Excel template.
Please note: To complete this, you will use the same Excel you used in support of Milestone One, but this time you will complete the “Capital Structure” tab. You will enter data in the yellow highlighted cells only.
In your written report, describe the corporation’s dividend policy and what impact it has on the investors.
Analyze the relationship between capital structure, cost of capital, and risk for this corporation. Use real-life examples from your chosen corporation to analyze these relationships.
Explain how the relationship between capital structure, cost of capital, and risk maximize corporate value. How do these relationships help inform decision making?
Valuation: This section of the report focuses on calculating current value, outlining assumptions, and estimating the future value of the corporation through forecasting the cash flows. Specifically, you must address:
Using the corporation’s three-year history, calculate the current market value of equity for your corporation using the provided Excel template. In your written report, explain what it means for the corporation.
Please note: This is the same Excel template you used in Milestone One, but this time you will complete the “Valuation” tab. You will enter data in the yellow highlighted cells only.
You will submit the Excel template along with your written report. You may embed pieces of the Excel template into your written report to help support your work in this section.
In your written report, outline any assumptions you have made in calculating the current value and estimating the future value of the corporation. Explain why you made these assumptions and why they are important. (Hint: assumptions can include growth rates, margins, trends, etc.)
Using the provided Excel template, estimate the current value of your corporation by forecasting the cash flows over five years. Calculate EVA, NPV, IRR, and MIRR. Explain your findings.
What to Submit
You will submit two files for Milestone Two. Your written portion should be 3- to 4-page Microsoft Word document with double-spacing, 12-point Times New Roman font, one-inch margins, and APA formatting. In another file, include the Excel Final Project Spreadsheet Template you use to address sections IV. A. and IV. C. above. Submit both your written response and the completed Excel template when submitting this assignment. Any citations should follow APA guidelines. Your supporting research should be as up to date as possible.
Any news stories, press releases, or additional sources must be dated within the last 60 days. Company data should be no more than one year old. Using older data may result in being asked to resubmit your work.
