HI5002: Research And Fact-Finding Of Australian Financial Products: Finance For Business Assignment, DU, Australia

University Deakin University
Subject HI5002: Finance For Business

Assignment Requirements:

The assignment should cover the structure and contents described below.

Introduction

A Brief introduction of your group’s work: the purpose of the assignment, key findings, and structure of the assignment

Part 1. Research and Fact-finding of Australian Financial Products

Visit the website of the Australian Stock Exchange (ASX) to find information about at least ten financial products that are publicly traded on the market.

Your answers can include the information gathered from fact-finding completed on the ASX website and research about financial markets and financial products.

Part 2. Fact-finding of Investment Analysis Tools in Australia

You are required to go to the Online Portal of ASX, read the materials of two education courses offered by ASX about fundamental analysis and technical analysis and answer the following questions:

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2.1. Fundamental Analysis

a. What is fundamental analysis?

b. What are you trying to learn about a company with fundamental analysis?

c. What kind of information from a company’s annual reports is useful for your investment?

d. Why dividend per share and dividend yield can be useful for investors to appraise the financial condition of a company given the limitations of financial ratio analysis?

2.2. Technical Analysis

a. What is technical analysis?

b. What are the three types of charts applying for Technical Assistance?

c. What is an uptrend, a downtrend, and how to recognize a change of trend?

d. What are the resistance and support lines?

e. What is the moving average? What does it tell investors?

Part 3: Capital Budgeting and Project Evaluation

Case Study: Assume that the company, where you are working as a team in Financial Department, is considering a potential project with a new product. It will require the company to buy new equipment that will generate the same revenue for the company each year.

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3.1. Capital Budgeting Decision Making:

Perform capital budgeting technique based on Equivalent Annual Cost (EAC) to advise the Company Management which option should be chosen if the relevant discount rate is 9%?

3.2. Risk Analysis and Project evaluation:
Assume that the company finally chose Option B. It expects to sell 600,000 units of the new product for an average price of $15 per unit. The Equipment in Option B has a residual value of $300 000 at the end of the project. The company will need to add $ 750 000 in working capital which is expected to be fully retrieved at the end of the project.
Other information is available below: Depreciation method: straight-line variable cost per unit: $10.5Cash fixed costs per year: $25 000Discount rate: 9%Tax Rate: 30%Upon consideration of unexpected economic conditions, the company management requires your Team to prepare a risk analysis to evaluate the outcome of the potential project when the values drivers of the project change by 20%.
Required:
identify the value drivers of the project cash flows, do a sensitivity analysis and provide the management with a sensitive analysis report which shows how net present value (NPV) would change with a 20% change in the value drivers.
Costs Option A Option B
Initial Investment 1,400,000 1,500,000
Year 1 35,000 25,000
Year 2 35,000 25,000
Year 3 35,000 25,000
Year 4 35,000 25,000
Year 5 25,000

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