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FINC2012 Corporate Finance II
INDIVIDUAL ASSIGNMENT
Due: 23:59 on 7th April
Objective:
In this assignment, you are required to evaluate the value of a target firm before the COVID-
19 pandemic using Weighted Average Cost of Capital (WACC) and Discounted Cash Flow
(DCF) analyses. Then, you are required to analyze the impact of the pandemic on the firm's
value and assess the firm's resilience under various scenarios.
Target firm:
Refer to the table on pages 3 and 4 of this document. Students are required to use the firm
whose sequence number matches the last 2 digits of their student identification number.
Instructions:
(1) Download the FY2019 annual financials of the target firm. Calculate the Free Cash Flow
to the Firm in FY2019 using the following equation and show the necessary steps (2 Marks).
FCF = EBIT(1 - T) + DA -∆ONWC – CAPEX
Note: You could obtain those data from DatAnalysis Premium via Morningstar through the University
library website.
(2) Obtain the current equity beta for the target firm from DatAnalysis Premium and assume
that it was the equity beta for FY2019. Estimate the after-tax Weighted Average Costs of
Capital for your target firm and show the necessary steps. (6 Marks).
(3) Assume that your target firm could maintain the FCF with a growth rate of 2% and compute
the firm value in FY 2019 using the perpetuity with growth approach. (3 Mark).
(4) Carry out sensitivity analysis on firm value in FY2019 across operating revenue, operating
expenses, CAPEX, and net working capital and discuss the key drivers of firm value. (5
Marks).
(5) Imagine that you foresee the coming wave of the COVID pandemic in 2020. Evaluate and
discuss the differences in the firm’s value under the following two scenarios: (5 Marks)
a) Worsening COVID pandemic in FY2020 – 21
b) The COVID pandemic under control and heading towards economic recovery towards the
second half of FY2021
2
(6) You should clearly explain your choices of variables and the entire estimation process,
using adequate references to academic journals (2 Marks). You should be able to illustrate
your analysis with appropriate graphs, which forms part of the overall professional presentation
of this report (2 Marks).
TOTAL MARK = 25
Other Requirements:
Include a cover/ title page showing your student identification number. Do not include your
name.
Maximum length of assignment: 2000 words excluding cover/ title page, tables, graphs,
figures, reference list and appendix. Penalties for going over the word limit will be applied as
per faculty assessment policy.
The appendix section does not have a word limit.
Do NOT include executive summary, introduction or conclusion sections. These sections will
not be marked.
Formatting requirements: single line spacing, 2 cm margins and 11 point font size. Tables,
charts and figures should be clearly labelled.
Penalties apply for poorly presented work.
You must label your answers for each part of the tasks clearly. (e.g. Task 1, Task 2, a. b., etc.).
Referencing: You are expected to use academic references to support your analysis and
arguments. Citations and the reference list must be prepared following one of the University of
Sydney referencing and citation styles (https://libguides.library.usyd.edu.au/citation). It is ideal
to employ at least three references to justify your arguments.
Writing: The logic of the answers must be easy to follow. There are expected to be no spelling
or grammatical errors and terminology should be clearly defined.
Professional presentation is highly encouraged.
Submit ONE word document ONLY. This document should include the main body of the
report and complementary materials in the Appendix.
General Marking criteria
The criteria below will be followed when marking each part of the assignment:
1. The extent and quality of critical reasoning/critical thinking.
2. The demonstration of knowledge of relevant theory.
3. The successful usage and interpretation of relevant data.
4. The extent to which the work is clearly, concisely and professionally presented.
3
List of target firms:
Seq Company Name Exchange:Ticker
00 Aurizon Holdings Limited ASX:AZJ
01 Auckland International Airport Limited ASX:AIA
02 Alumina Limited ASX:AWC
03 Premier Investments Limited ASX:PMV
04 Iress Limited ASX:IRE
05 Technology One Limited ASX:TNE
06 WiseTech Global Limited ASX:WTC
07 Altium Limited ASX:ALU
08 GUD Holdings Limited ASX:GUD
09 ARB Corporation Limited ASX:ARB
10 CSL Limited ASX:CSL
11
Nine Entertainment Co. Holdings
Limited
ASX:NEC
12 Fletcher Building Limited ASX:FBU
13
Reliance Worldwide Corporation
Limited
ASX:RWC
14 Tabcorp Holdings Limited ASX:TAH
15
The Star Entertainment Group
Limited
ASX:SGR
16 Aristocrat Leisure Limited ASX:ALL
17 New Hope Corporation Limited ASX:NHC
18 Whitehaven Coal Limited ASX:WHC
19
Washington H. Soul Pattinson and
Company Limited
ASX:SOL
20 Orica Limited ASX:ORI
21 JB Hi-Fi Limited ASX:JBH
22 Johns Lyng Group Limited ASX:JLG
23 Monadelphous Group Limited ASX:MND
24 James Hardie Industries plc ASX:JHX
25 Adbri Limited ASX:ABC
26 Brickworks Limited ASX:BKW
27 Boral Limited ASX:BLD
28 Sandfire Resources Limited ASX:SFR
29 Link Administration Holdings Limited ASX:LNK
30 Computershare Limited ASX:CPU
31 Treasury Wine Estates Limited ASX:TWE
32 Bapcor Limited ASX:BAP
33 Incitec Pivot Limited ASX:IPL
34 South32 Limited ASX:S32
35 IGO Limited ASX:IGO
36 Lynas Rare Earths Limited ASX:LYC
37 Iluka Resources Limited ASX:ILU
38 Lendlease Group ASX:LLC
39 Stockland ASX:SGP
40 Centuria Capital Group ASX:CNI
41 Mirvac Group ASX:MGR
42 Charter Hall Group ASX:CHC
43 Abacus Property Group ASX:ABP
44 The GPT Group ASX:GPT
45 Growthpoint Properties Australia ASX:GOZ
46 Downer EDI Limited ASX:DOW
47 IDP Education Limited ASX:IEL
48 Origin Energy Limited ASX:ORG
49
Cleanaway Waste Management
Limited
ASX:CWY
4
50 ASX Limited ASX:ASX
51 Metcash Limited ASX:MTS
52 Coles Group Limited ASX:COL
53 Woolworths Group Limited ASX:WOW
54 APA Group ASX:APA
55 Harvey Norman Holdings Limited ASX:HVN
56 Regis Resources Limited ASX:RRL
57 Evolution Mining Limited ASX:EVN
58 Perseus Mining Limited ASX:PRU
59 De Grey Mining Limited ASX:DEG
60 Newcrest Mining Limited ASX:NCM
61 ResMed Inc. ASX:RMD
62 Cochlear Limited ASX:COH
63
Fisher & Paykel Healthcare
Corporation Limited
ASX:FPH
64 Ramsay Health Care Limited ASX:RHC
65 Sonic Healthcare Limited ASX:SHL
66 Healius Limited ASX:HLS
67 Ansell Limited ASX:ANN
68 Pro Medicus Limited ASX:PME
69 Atlas Arteria Limited ASX:ALX
70 Transurban Group ASX:TCL
71 Flight Centre Travel Group Limited ASX:FLT
72 Webjet Limited ASX:WEB
73
Corporate Travel Management
Limited
ASX:CTD
74 Smartgroup Corporation Ltd ASX:SIQ
75 Spark New Zealand Limited ASX:SPK
76 Telstra Group Limited ASX:TLS
77 carsales.com Ltd ASX:CAR
78 Domain Holdings Australia Limited ASX:DHG
79 REA Group Limited ASX:REA
80 SEEK Limited ASX:SEK
81 Qube Holdings Limited ASX:QUB
82 Orora Limited ASX:ORA
83 EVT Limited ASX:EVT
84 Ingenia Communities Group ASX:INA
85 AGL Energy Limited ASX:AGL
86 Worley Limited ASX:WOR
87 Beach Energy Limited ASX:BPT
88 Woodside Energy Group Ltd ASX:WDS
89 Santos Limited ASX:STO
90 Viva Energy Group Limited ASX:VEA
91 Ampol Limited ASX:ALD
92 Super Retail Group Limited ASX:SUL
93 Lovisa Holdings Limited ASX:LOV
94 The a2 Milk Company Limited ASX:A2M
95 Bega Cheese Limited ASX:BGA
96 Inghams Group Limited ASX:ING
97 Kelsian Group Limited ASX:KLS
98 Blackmores Limited ASX:BKL
99 News Corporation ASX:NWS