PROJECT - COMPANY VALUATION
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FINA503
PROJECT - COMPANY VALUATION
Due Date: 11.59 pm, Sunday 13th October 2024
Weighting: 50%
Type: Individual
Submission: Electronic Submission via Canvas
Instructions for the Project
Each student is assigned a New Zealand based company for valuation (please see the Canvas for your assigned company). Students are required to develop a company valuation model using the discounted cashflow valuation and relative valuation method for the assigned company.
The model should contain:
Financial statements that are forecasted 5 years into the future based on the 5 years’ worth of financial statement (Balance Sheet, Income Statement, Cashflow Statement). Students are required to build the financial statements for the forecasting purpose from the annual report .
o Assumptions made in forecasting the future should be identified and justified with reference to past financial information, other annual report information and any other information sources that the student deems relevant.
o All assumptions made by the student should be reasonable and justified.
o The model should also allow the user to change key inputs to assess the impact on the firm’s value.
o Students should feel free to add in additional information from the annual reports where it will add value to their model i.e., segmented revenue information or more detailed expense data.
The model should accurately compute the weighted average cost of capital and beta with the option of allowing users to alter the frequency of the beta used in the calculation of the WACC (i.e. one year daily data versus five years monthly). The student should identify the most appropriate period and frequency for their company.
Accurately employ the Free Cashflows formula to compute the cashflows for the next 5 years based on the forecasted financial statements’ information, and then use the Discounted Cashflow and/or relative valuation method to compute the value of the company and hence stock price.
The valuation model should conform to the rules of good financial model design.
The model will only be marked if it is built within the spreadsheet file “ Valuation Project (S2 2024).xlsm” available from Canvas. Students are expected to be able to explain or demonstrate any features or techniques in their assignments if requested.
Marking Criteria
To receive a C Grade, students must ensure their model meets the following requirements:
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Model |
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o Clear separation of inputs and outputs o Formulas are correctly linked without any hardcoded values
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To receive a B Grade, students must ensure their model meets the following requirements:
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Model |
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Layout |
o Clear separation of inputs and outputs o Formulas are correct and correctly linked o Employs menus to make the model easy to use o Report attempts to justify the assumptions made clearly o Model outlines key findings clearly |
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To receive an A Grade, students must ensure their model meets the following requirements:
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Model |
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Layout |
o Clear separation of inputs and outputs o Formulas are correct and correctly linked o Employs menus to make the model easy to use o Changes to assumptions used to forecast financial statements are easy to do o Report attempts to justify the assumptions made very clearly o Model outlines key findings exceptionally clearly |
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Features |
• Data validation is employed in the summary sheet to prevent inappropriate inputs for all inputs • Excel controls are used extensively to make changes to the model easy and intuitive • Model contains a well set out and easy to understand summary page containing all key inputs and highlighting the key findings and other key information • Model employs sensitivity analysis to examine the effect of changes in key drivers of value |
2024-10-09