Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: THEend8_
FINM7401 Finance
Overview: The objective of this individual assignment is to assess students’ ability to apply the
theoretical knowledge learnt during the lectures to a practical case. Some of the questions might
go beyond what we covered during the lectures. Students are required to do additional readings
in the reference book, in any other relevant books, or online.
Grade: The individual assignment counts for 30% of your final grade for this course. The
maximum number of points is 45. There are 41 points for the practical case and 4 additional
points for the presentation/writing of the final document. The number of points per sub-
question is provided for each question in parentheses.
Layout and presentation:
1. Your document should be typed in Times New Roman font, size 12.
2. The assignment should be 1.5 lines-spaced and have margins of 2.54 cm (standard).
3. Include the cover page with your name, student number, date and signature.
4. The answers to the different questions must be written in the document. For calculation
questions, you need to show all your workings (including timeline if appropriate) and
round your final answers to two decimal places (intermediate answers should keep at
least 6 decimals). If you are using Excel, all results (including tables) need to be reported
within the written document (but not the functions used in the cells).
5. All your answers must be typed in, handwriting/drawing is not acceptable.
6. If you use any reference (e.g. Journal, Book, website etc.), you must reference it
according to UQ Harvard Referencing Style.
7. An additional 4 marks will be awarded for clear presentation and writing (academic English).
Make sure that there are no mistakes and that your tables are well formatted before submitting
the document!
Submission: Read the document ‘Individual Assignment Submission Guidelines’ and follow
the instructions. You must submit to Blackboard and Turnitin a single PDF document saved as
“LastnameFirstname_FINM7401assign.pdf” file.
Late Penalties: Late penalties apply! 10% per calendar day (or part thereof)! Don’t submit at
the last minute! Penalties start from Monday 23rd October 2023 at 10.01am.
FINM7401 Finance Semester 2, 2023
Page 2 of 4
Practical case: estimating a stock price (41 marks)
You have just graduated from UQ and have started your first job as a Financial Analyst at the
Commonwealth Bank in Brisbane. Your first assignment is to analyse the stock price of an
Australian listed company using the dividend discount model and the comparable model.
You will need to gather all the necessary financial data using CapitalIQ and attempt the set of
questions presented below. Refer to Tutorial 1 for instructions on how to create a login and use
CapitalIQ.
1) Select a company that satisfies the following requirements (using the Screen Builder helps):
i. Primary listing on the Australian Securities Exchange (ASX)
ii. Included in the S&P/ASX200 Index
iii. Not part of the Financials, Utilities, and Real Estate primary industries
iv. Market capitalisation on 30 June 2023 in excess of AUD 10 billion
v. Share price on 30 June 2023 above 1 AUD
vi. The company has had positive Basic Earnings per Share (EPS) for the past six fiscal
years (i.e., FY2023-FY2018)
vii. The company’s Dividend Payout Ratio (DPR) is a positive value smaller than 100% at the
end of the past three fiscal years (i.e., FY2023-FY2021).
viii. The latest analyst’s consensus estimates of future earnings growth for the company (mean
LT Growth) is positive.
Required: Provide a list of five companies that satisfy the criteria and select one of them for
the rest of the project. [5 marks]
2) For the company you have selected, provide 3 tables showing: [5 marks]
Table 1:
i. the company’s name
ii. the company’s industry
iii. the company’s market capitalisation on 30 June 2023 (in AUD)
iv. the company’s price on 30 June 2023 (in AUD)
v. the company’s Dividend per Share for FY2023 (in AUD)
vi. the latest analyst’s consensus estimates of future earnings and growth for the company
(mean LT Growth)
vii. the company’s latest Beta over the past five years (Beta 5Y)
viii. the company’s Book Value per Share for FY2023 (in AUD)
Table 2:
ix. the company’s Basic Earnings per Share for FY2023-FY2018 (in AUD)
Table 3:
x. the company’s dividend Payout Ratio for FY2023-FY2021
xi. the company’s Return on Equity for FY2023-FY2021
Note: this data is available in CapitalIQ under Tearsheet, Income Statement, Balance Sheet,
Ratio, and CIQ Estimate.
FINM7401 Finance Semester 2, 2023
Page 3 of 4
3) Estimate the annual growth of the firm using the following three approaches: [4 marks]
i. Historical geometric mean of the annual EPS (Basic Earnings per Share) growth rate
over the last five years (FY2023-2019)
ii. Analyst’s consensus estimates of future earnings and growth (mean LT Growth)
iii. Fundamental analysis: the average of the Retention Ratio * Return on Equity over the
last three years (FY2023-2021)