Research on Financial market and Capital
Budgeting Analysis
Purpose of the assessment (with ULO
Mapping)
Students are required to form a
group from 3 to 5 members to study, undertake research, analyse and conduct
academic work within the topics of financial management from week 1 to week
9. (ULO 1, 2, 3 and 4)
Weight
40 % of the total assessments, including 30%
for written report and 10% for presentation
Total
Marks
40 (30 for written report and 10 for
presentation)
Word
limit
Not more than 3,000 words
Due Date
Registration of groups: 5:00 pm Friday, Week 7
Final Submission of Group Assignment and
Presentation: 11:59 pm Sunday, Week 10
Submission Guidelines
All work must be submitted on Blackboard by
the due date along with a completed assignment cover page. Make sure that
your group member’s name and surname, student ID, unit name, and code and
lecture’s name are written on the cover sheet of the submitted assignment.The assignment must be in MS Word format, no
spacing, 12-pt Arial font and 2 cm margins
on all four sides of your page with appropriate section headings and page
numbers.Reference sources must be cited in the text of
the report, and listed appropriately at the end in a reference list using
Harvard referencing style.Submitted work should be your original work
showing your genuine studying. Evidence of your original work
(allocation of tasks,
discussion, file exchanges, drafts, etc.) need to be presented in the records of your
group work in Discussion Board, available in Subject Tools, Black Board. Your
assignment WILL NOT BE MARKED by your
lecturers if the evidence of your group work does not shown in the Discussion
Board. Three
attempts of submission are allowed for checking similarity and final
submission. Your lecturers only mark the final submission. As a guide, a
similarity score of over 30% is considered as excessive except
in the cases
where the similarity is caused by the use of
template provided by the lecturers, types of assignment, references or
sources of data. Please note that it takes 48 hours for the self-check report
to be available for your viewing. Please also note that fact findings and
working at same case study project evaluation assignment like this one may
yield higher than 30% similarity. Therefore, do not panic and shower your
lecturers with emails about similarity after your submission if your work is
genuine. Your lecturers will look
at details of the similarity report and ensure a proper marking without any
bias on that threshold 30%.When you submit your assignment
electronically, please save the file as ‘Group Assignment- your group name.doc’. You are required to submit the assignment at
Group
Assignment Final Submission, which is under Assignment and Due Dates on
Blackboard. Always keep an electronic copy until you have received the final
grade for the Unit. Please make sure that you submit the correct file in the
correct format that is readable in Black Board. ANY APPEAL RELATING TO SUBMITTING WRONGFILES AND WRONG FORMAT AFTER THE DEADLINE WILL NOT BE CONSIDERED.
ASSIGNMENT SPECIFICATIONS
Assignment Tasks
This assignment task is a written
report that include 3 parts: Part 1 is
a research and fact finding on Australian financial market.
Part 2 is a fact finding of financial market
regulation in Australia and Part 3 is a risk
analysis and project evaluation. To complete the assignment, groups are
recommended to obtain data and information from relevant web sites, especially websites of Australia
Stock Exchange: www.asx.com.au; Australian Securities and Investment Commission: https://asic.gov.au/ and the Australian Prudential Regulation Authority
(APRA) https://www.apra.gov.au for
their research and fact finding. Using secondary data (researches done by
others) for fact findings in Pat 1 and Part 2 is NOT
RECOMMENDED and will be PENALIZED. Please
also note: group assignment for HI5002 is DIFFERENT every
trimester. Attempt to submit a PREVIOUS TRIMESTER
ASSIGNMENT or A WRONG ASSIGNMENT will get a ZERO
(0) mark without any consideration for
resubmission.
Requirements HI5002
The assignment should cover the
contents described bellows.
Assignment
Structure and Details of Assignment Tasks
Introduction
Briefly introduction of your group’s work: the
purpose of assignment, key findings and structure of the assignment (not more
than 300 words)
Part 1. Research and fact
finding of Australian financial market
1.1
Comparison of four key financial institutions: commercial banks, insurance companies, investment banks and investment
funds in Australia from the perspective of a potential investor who would
like to invest into the institutions
Criteria for comparison include: (1) classification (the
group of financial institutions it belongs to); (2) market sector
of operation; (3) key business activities; and (4) main source
of income. Organize your
group’s comparison in a relevant table. Your group’s research should be
supported by a fact finding of real life examples of a commercial bank,
insurance company, and investment bank and investment fund in Australia. Your
group’s discussion on each example should reflect the above mentioned
criteria and the following information: (i) what is the code of stock listed,
(ii) when was the company’s stock was first listed, (iii) what is the current market
capitalization of that
stock, (iv) the
current total share
outstanding, (v) who is
the chairman and who is the CEO of that
company, (vi) a graph of five year
dividend payment for each
company and (vii) next dividend date. Using ASX and ASIC websites for the
fact finding. Your group is not allowed to choose the cases I have used as
examples in this assignment instruction.
Example: Commonwealth Bank is a commercial bank,
which is categorized in the group
of Authorized Deposit-taking Institutions (ADIs) in Australia.
Commonwealth Bank operates in banking market
sector. Its key business is taking deposit from individuals as well asbusinesses, and then lend
those pooled savings to other individuals and businesses. Its
main source of income is the difference between the interest rates it
charges the borrowers and the interest rates
it pays the depositors. The code of listed commonwealth bank stock
on Australian Stock
Exchange is CBA.
The stock was first listed
on 12/09/1991. The total
outstanding share 1,770,239,507. As of 18 February 2020, CBA market cap is
158.37bn, Ms Catherine Livingstone is the CBA’s Chairman, Non Exec. Director
and Mr Matthew Comyn is the Managing Director, CEO, Director. The next dividend payment date is 31
March 2020.
1.2
Analysis of three financial management questions: (i) capital budgeting,
(ii) capital structure and (ii) working capital management
Define the three financial
management questions and justify your group’s analysis by illustrating examples: Choose one or more events
described by media
(CNN Business, Financial Times, Dow Jones financial
news etc.) about a company who is doing one or more activities related to the three
financial management questions. Analyse that event
(s) applying the three
financial management questions. Note: Each question is to be illustrated by at least
one event.
Example of an event in media that
reflect one of the
three financial management questions:Commonwealth Bank’s Project Bond-i: Bonds on block
chain in collaboration with World Bank: “In August
2018 the World Bank and CommBank successfully launched Bond-i (‘blockchain operated new debt instrument’). It’s the world’s first bond to be created, allocated, transferred and managed through its life cycle
using block chain technology”. Source: https://www.commbank.com.au/business/business-insights/project-bondi.htmlBond-I Project by Commonwealth Bank is an outstanding example of capital budgeting in financial
management. This is an investment decision to generate future cash flows for
the bank in providing the auxiliary financial service of issuing debt
instruments. Using block-chain technology to create, locate, transfer and
manage debt instruments undoubtedly enable huge saving of money and enhancing
efficiency. However, the security risk may be a big potential problem for
this project.
Part 2. Fact Finding of
Australian financial market regulation
2.1
Fact finding of the
listing on ASX
Assuming your group is
working for a company that is considering to be listed on ASX in the near future. Go to the
website of Australian Stock Exchange (ASX),
do a fact finding and present
an analysis of Australian Stock Exchange Listing Requirements and process.
The following questions should be addressed:
What are the advantages of
being a listed company on ASX?What are the problems that need to be taken
in consideration for being listed
company on ASX?What are the requirements
for listing on ASX?What are the steps of
listing procedures on ASX?How listing fee is
applied. Using ASX listing fee calculator to identify your selected company
listing fee, choosing any random number for the ranges of market cap: 10
million -50 million; 50 million-100 million; 100 million-500 million.
2.2
Fact Finding
of requirements on Financial advisory service registration in Australia Assuming after graduation
you would like to work as a financial adviser. Go to the website of
Australian Securities and Investment Commission, do a fact finding and present
an analysis of financial advisor registration to identify whether you are
qualified and what steps should be taken to be a financial adviser in
Australia. The following questions should be
addressed:
What is the ASIC’s
Financial advisers register?Who should be on the
Register, who are not on the Register and who updates the register?What information should be
on the Register?What are the relevant
financial products for a financial advisor?What are the professional
standards applied for a financial advisor.
Part 3. Risk analysis and
project evaluation
3.1
Perform a
scenario analysis with data provided
Assume that
your selected company is considering a potential project with a new product that is expected to sell for an average
price of $30 per unit and the company expects it can sell 350,000 units per
year at this price for a period of 4 years. Launching this project will
require purchase of a $3,500,000 equipment that has residual value in four
years of $500,000 and adding $ 1,000,000 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: $20
Cash fixed costs per year
$450,000 Discount rate: 12%
Tax Rate: 35%
Do a SCENARIO ANALYSIS with cash flows of the assumed
project to determine the sensitivity of
the project’s NPV to different scenarios that are defined in terms of the
estimated values for each of the project’s value drivers. Please work on two
scenarios corresponding to the worst-
and best-case outcomes for the project. Your group needs to provide the
results in (a) relevant tables:
Worst case: Unit sales decrease by
20%; price per unit decreases by 20%; variable cost per unit increases by 20
%; cash fixed cost per year increases by $200,000
Best case: Unit sales increase by 20%; price per unit increases by 20%; variable
cost per unit decreases by 20%; cash fixed cost per year decreases by
$200,000
Based on the scenario analysis outcome, draw
relevant conclusion about project NPV’s sensitivity.
3.2
Perform an NPV break even analysis for
the case where price per unit decreased by 20%, variable cost per unit
increases by 20%, cash fixed costs decreases by $200,000 to identify the
number of unit sales that is needed for the project to get break-even
Trial and error method is to be used with
excel spread sheet.
Conclusion
Summarize the outcomes of your group’s works (not more than 300
words)
Presentation: Your group is required to present the assignment outcomes in a video
presentation. All members need to participate in the presentation using a
PowerPoint slides. The presentation is in no more than 10 minutes.
The video
presentation should be uploaded to a web-based hosting platform (e.g.
Youtube) and your group is required to submit the
link to the video via a separate submission link at Blackboard.
Marking criteria
Marking
criteria
Weighting
1.
Research on Australian financial market
1.1. Comparison of four key financial
institutions
4%
1.2. Analysis of three financial management
questions
4%
2. Fact
Finding of Australian financial market regulation
2.1. Fact finding of the listing on ASX (1 mark each question)
5%
2.2. Fact Finding of requirements on Financial
advisory service registration (1 mark each
question)
5%
3. Risk analysis and project
evaluation
3.1. Perform a scenario analysis with data
provided
5%
3.2. Perform an NPV break even analysis
5%
4.
Academic writing: Presentation, structure and academic writing
