- CenturyLink (CTL)
- Iron Mountain (IRM)
- Ford Motor (F)
- Kimco Realty (KIM)
- Invesco (IVZ)
- AT&T (T)
- Macerich Co (MAC)
- Seagate Technology (STX)
- Navient Corp (NAVI)
- Altria (MO)

The case study will be presented in one Microsoft Word and one Microsoft Excel document that includes analysis of the company’s financial statements as well as a series of other questions aimed at testing your knowledge of working capital management and capital budgeting.

Submit your case study in the following format:

1. APA Format.

2. List the company selected for evaluation.

3. Provide in Appendix format the company’s financial statements from 2019. These can be annual or from a particular quarter. If the financials are in PDF version, please review here how to insert PDF documents into Microsoft Word.

4. Each question must be listed in Microsoft Word, followed by the answer. You must also show your calculations.

5. Cash Flow analysis and financial statement analysis must be provided in Microsoft Excel format with commentary provided in the Microsoft Word document.

Template for Deliverable One – Financial Statement Analysis

For Deliverable 1: – Financial Statement Analysis, the following topic(s) in Mastery Preparation will help you:

· Topic 1: Goal of the Firm, Agency Problem, and Ethics

· Topic 2: Accounting and Financial Statement Analysis

Answer the questions below in order. List the question then provide the answer. Save this file to your computer and fill in the answers. You __MUST__ show __ALL__ calculations to demonstrate competency. (You do not have to show formulas but will need to show the numbers you used to get your answers.)

1. List your company name and the ticker symbol it is traded under.

2. Briefly describe this company. What market is it in? What products does it produce, and most importantly, who are its major competitors?

3. Locate the Balance Sheet and Income Statement for your company. Do the same for one of its competitors. A copy of these statements must be included in your final project.

4. There are three parts to this task:

a. Perform a ratio analysis for these two companies, using the ratios listed below and the following template.

**Ratio**

**Company**

**Competitor**

Current Ratio

1.3

1.45

Etc.

b.

c. Produce a Common-size balance sheet and income statement for your company and its competitor.

d. Discuss any major differences in what you see in the various ratios between one company and another. More importantly, discuss what might be the cause of these differences.

Use the link below to access the optional submission folder to receive feedback from your instructor. This optional submission is for feedback only. You will not be evaluated and a rubric will not be filled out. The rubric is attached as reference only.

You may submit this deliverable for initial feedback. Faculty will review your work using a scoring guide that reflects competency levels required in the workplace and will provide you with substantive feedback and suggestions for how to improve if needed. It is good practice to review both the evaluation checklist and the scoring guide as you prepare your deliverable.

NOTE: Submit to the optional submission page for initial feedback only. You must go through Stage 1 and Stage 2 submissions to be evaluated for course credit. See the Mastery Project Overview.

Assignment 2

The case study will be presented in one Microsoft Word and one Microsoft Excel document that includes analysis of the company’s financial statements as well as a series of other questions aimed at testing your knowledge of working capital management and capital budgeting.

Submit your case study in the following format:

1. APA Format.

2. List the company selected for evaluation.

3. Provide in Appendix format the company’s financial statements from 2019. These can be annual or from a particular quarter. If the financials are in PDF version, please review here how to insert PDF documents into Microsoft Word.

4. Each question must be listed in Microsoft Word, followed by the answer. You must also show your calculations.

5. Cash Flow analysis and financial statement analysis must be provided in Microsoft Excel format with commentary provided in the Microsoft Word document.

Template for Deliverable Two – Time Value of Money Calculations

For Deliverable 2: Time Value of Money Calculations, the following topic(s) in Mastery Preparation will help you:

· Topic 5: Time Value of Money and Asset Valuation

As part of the firm’s evaluation process, you have been asked to take a skills test that covers several financial analysis techniques. See how you would do by answering the following questions:

1. Suppose you invest $1,000 in this company for 15 years and expect to earn 5.5% per year. What is the future value in 19 years?

2. You want to begin saving for a child’s college education, and you estimate that he/she will need $130,000 in 15 years. If you feel confident that you can earn 8% per year, how much do you need to invest today?

3. You are looking at an investment that will pay $3,500 in 4 years if you invest $1,075 today. What is the implied rate of interest?

4. Suppose you are offered an investment that will allow you to double your money in 3 years. You have $8,000 to invest. What is the implied rate of interest?

5. Suppose you want to buy a new house. You currently have $20,000, and you figure you need to have a 10% down payment plus an additional 5% in closing costs. If the type of house you want costs about $150,000, and you can earn 8.5% per year, how long will it be before you have enough money for the down payment and closing costs?

6. Suppose you invest $500 in a mutual fund today and $400 in one year. If the fund pays 7% annually, how much will you have in two years?

7. Suppose you win the Publishers Clearinghouse $20 million sweepstakes. The money is paid in equal annual installments of $571,428.57 over 35 years. If the appropriate discount rate is 6%, how much is the sweepstakes actually worth today?

8. Suppose you want to borrow $35,000 for a new car. You can borrow at 8% per year, compounded monthly. If you take a 7-year loan, what is your monthly payment?

9. Suppose you borrow $2,500 at 6%, and you are going to make annual payments of $785. How long before you pay off the loan?

10. Suppose you begin saving for your retirement by depositing $2,000 per year in an IRA. If the interest rate is 7.5%, how much will you have in 40 years?

11. Calculate the following:

a. What is the APR if the monthly rate is 0.8%?

b. What is the APR if the semiannual rate is 0.6%?

c. What is the monthly rate if the APR is 17% with monthly compounding?

12. Suppose the following:

a. You can earn 1% per month on $1 invested today. How much are you effectively earning?

b. If you put it in another account, you earn 3% per quarter. What is the APR? Effective Rate?

13. Consider a bond with a coupon rate of 9% and coupons paid annually. The par value is $1,000, and the bond has 5 years to maturity. The yield to maturity is 11%. What is the value of the bond?

14. Assuming dividends grow at a constant rate, use the Dividend Growth Model to compute how much you think your company stock should be selling for. Explain where you got the variables for your equation.

15. Use the CAPM to find your required rate of return.

Use the link below to access the optional submission folder to receive feedback from your instructor. This optional submission is for feedback only. You will not be evaluated and a rubric will not be filled out. The rubric is attached as reference only.

You may submit this deliverable for initial feedback. Faculty will review your work using a scoring guide that reflects competency levels required in the workplace and will provide you with substantive feedback and suggestions for how to improve if needed. It is good practice to review both the evaluation checklist and the scoring guide as you prepare your deliverable.

Assignment 3

The case study will be presented in one Microsoft Word and one Microsoft Excel document that includes analysis of the company’s financial statements as well as a series of other questions aimed at testing your knowledge of working capital management and capital budgeting.

Submit your case study in the following format:

1. APA Format.

2. List the company selected for evaluation.

3. Provide in Appendix format the company’s financial statements from 2019. These can be annual or from a particular quarter. If the financials are in PDF version, please review here how to insert PDF documents into Microsoft Word.

4. Each question must be listed in Microsoft Word, followed by the answer. You must also show your calculations.

5. Cash Flow analysis and financial statement analysis must be provided in Microsoft Excel format with commentary provided in the Microsoft Word document.

Template for Deliverable Three – Capital Budgeting

For Deliverable 3: Capital Budgeting, the following topic(s) in Mastery Preparation will help you:

· Topic 5: Time Value of Money and Asset Valuation

· Topic 6: Cost of Capital and Capital Budgeting Decisions

1. The company has 2 proposed projects. Here are the projects’ net cash flows (in thousands of dollars). The CFO has determined the weighted average cost of capital to be 10 percent.

**Expected Net Cash Flow**

**Year**

**Project L**

**Project S**

0

($100)

($100)

1

35

60

2

75

75

3

150

125

4

50

100

a. What is the payback period for projects L & S?

b. What is the net present value (NPV) of each project?

c. What is the internal rate of return (IRR) for each project?

d. What is the modified internal rate of return (MIRR) for each project?

e. Which method is the best? Why?

2. Suppose you have predicted the following returns for stocks C (Your Company) and T (Your Competitor) in three possible states of nature. What are the expected returns?

**State**

**Probability**

**C**

**T**

Boom

0.2

0.13

0.30

Normal

0.5

0.12

0.17

Recession

0.3

0.04

0.02

3. Suppose you hold a 2-stock portfolio of the company you picked and the competitor.

a. Compute the rate of return for the 2 stocks for the year.

b. If your portfolio was made up of 40% of the stock you picked and 60% of the stock of the competitor, what was the rate of return on the portfolio for the year 2005?

4. Consider an asset with a beta of 1.2, a risk-free rate of 4.3%, and a market return of 12%.

c. What is the reward-to-risk ratio in equilibrium?

d. What is the expected return on the asset?

5. Using the Dividend Growth Approach, suppose that your company is expected to pay a dividend of $1.25 per share next year. There has been a steady growth in dividends of 5.1% per year and the market expects that to continue. The current price is $29. What is the cost of equity?

6. Suppose your company has an equity beta of .62 and the current risk-free rate is 4.1%. If the expected market risk premium is 9.6%, what is your cost of equity capital?

7. Your company has preferred stock that has an annual dividend of $2. If the current price is $20, what is the cost of preferred stock?

8. Answer the following questions given the information below:

__Equity Information__

40 million shares

$100 per share

Beta = 1.15

Market risk premium = 8%

Risk-free rate = 3%

__Debt Information__

$1 billion in outstanding debt (face value)

YTM = 9%

9.

a. What is the cost of equity?

b. What is the cost of debt?

c. What is the after-tax cost of debt?

d. What are the capital structure weights?

e. What is the WACC?

Use the link below to access the optional submission folder to receive feedback from your instructor. This optional submission is for feedback only. You will not be evaluated and a rubric will not be filled out. The rubric is attached as reference only.

You may submit this deliverable for initial feedback. Faculty will review your work using a scoring guide that reflects competency levels required in the workplace and will provide you with substantive feedback and suggestions for how to improve if needed. It is good practice to review both the evaluation checklist and the scoring guide as you prepare your deliverable.

Assignment 4

The case study will be presented in a Microsoft Word and a Microsoft Excel document that includes analysis of the company’s financial statements as well as a series of other questions aimed at testing your knowledge of working capital management and capital budgeting.

Submit your case study in the following format:

1. APA Format.

2. List the company selected for evaluation.

Template for Deliverable 4 – Cash, Budgeting, and Working Capital Management

For Deliverable 4 – Cash, Budgeting, and Working Capital Management, the following topic(s) in Mastery Preparation will help you:

· Topic 3: Working Capital Management

· Topic 4: Financing and Asset Management

**Additional resource:** Go to The Corporate Finance Institute link here to find cash budgeting templates.

The Norton Company produces a product that has the following sales expectations for 2007:

**Month**

**Sales ($)**

May

150,000

June

150,000

July

300,000

August

450,000

September

600,000

October

300,000

November

300,000

December

75,000

January

150,000

February

170,000

March

180,000

Of these sales, 5% are collected during the month, 70% are collected the next month, and 25% are collected in the third month.

The company is in the process of developing the cash budget for July through December. The company has the following monthly expenses:

Administrative cost $50,000

Lease Payment $10,000

The wage rate for labor is $7.50 per hour, and salespeople receive a commission of 8% of sales. It has been determined that each dollar of sales requires 2 minutes of labor. This labor is done for 10% of the sales three months away, for 80% of the sales two months away, and for 10% of sales one month away, and no labor is spent on the current month’s sales. Commission is paid during the month the sale is made. Of the total wage bill for a month, 80% percent is paid during the month and 20% in the following month.

The company will receive $2 million in October from the sale of securities and will make a $2 million progress payment on a new plant in November. In addition, in September and December, the company will make a $50,000 installment payment on taxes. After the sale of securities, the company will be required to make monthly interest payments. The securities carry a 9.125% annual interest rate.

The inventory the company purchases represents 60% of gross sales. In order to have proper inventory, the company in any month purchases 65% of next month sales, 25% of the sales 2 months hence, and 10% of the current month’s sales. In addition, the company keeps a safety stock equal to 15% of the average sales for the next three months. Ten percent of the inventory purchases are paid for in the current month, with the remainder being paid in the following month.

The company has a policy that a minimum of $50,000 must be kept on hand at the end of the month. The excess is invested in 30-day marketable securities yielding 7% annually. Shortages are borrowed at 9% annually and repaid as soon as possible. At the end of May, the cash balance was $110,000, of which $60,000 was invested in a 30-day security.

1. Prepare a cash budget using Microsoft Excel. The final budget must be pasted into Microsoft Word.

2. The company has always had very weak sales in the winter months. This time the sales manager is convinced that he can improve the sales in December, January, February, and March by 50%, 40%, 40%, and 40% respectively.

a. What impact does this have on the cash requirements of the company?

b. Rerun your model. Explain what happens.

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