Any later submissions will not be accepted under any circumstances.
This project requires the knowledge of excel and students are required to
use the excel functions to tackle the project.
Ideally, each group should have 3 students. I also accept groups with 2
students. I do not recommend some students to pursue this project
individually because of high amount of work loads needed.
Each Group should submit their spreadsheets via Canvas and hand in a
hard copy of the final project to the instructor. Each group should
combine the data into one excel file. To avoid duplicated submissions each
group should choose only one group member to submit and the excel file
should contain each group members’ names and student Ids.
If the group information is missing or incomplete on either excel file
and/or hard copy, 10 points will be taken out from the final project grade.
Descriptions of Project:
Each group should choose one company of its interest and making
capital budgeting investment decisions.
1. Describe the company and industry it is operating in. (5 points)
2. Choose two other companies as its competitors (Should be in the
same industry) and use past 5 years’ financial data to construct the
ratio analysis and common-size statements and make comparisons
financially among them. Reason the differences in their performance
both qualitatively and quantitively (such as using Du Pont Identity).
3. Construct the pro Forma financial statements (balance sheets, income
statements and statement of cash flows) for next 6 years and state
clearly the validity of your assumptions such as sales growth, payoff
ratio etc. (10 points)
4. Compute the external financing needed and provide valid reasons
how the company will choose the source of its financing and make
the financial statements balanced. (10 points)
5. Compute the WACC for the company and elaborate clearly the
capital structure and tax rate. (5 points)
6. Compute the Operating Cash flows and free cash flows for next 6
years. (15 points)
7. Compute the total value of the company and implied stock value. (5
8. Forecasting market valuation ratios and justify your outcome. (10
9. Perform the sensitivity analysis and show how firm value and stock
value might differ by varying your assumptions such as sales growth
or WACC. (20 points)
10. Conclusion whether this company is a good investment, short-term
and long-term. (5 points)