Business finance report under RMIT University. Here are the attached files please follow closely

1
BUSINESS FINANCE REPORT: A CASE STUDY ON KIDMAN’S
RESOURCES
2
Executive summary

The Company Kidman Resources Limited is taken into concern in the report regarding the
detailed analysis of the WACC value of the Company, NPV analysis and the beta analysis. The
Company has WACC value of 0.11, which is much lower that means it is more prone to market
risks, and hence it may lose its shareholders. On the other hand, the NPV value of the company
is -44.841 in the first alternative and -36.834 in the second alternative. So, it can be said that it
will generate low accounting profit and it will be more prone to risks.
3
Table of contents
Introduction ..................................................................................................................................... 4
Part A .............................................................................................................................................. 4
Calculation of Kidman’s WACC using market data....................................................................... 4
Part B ............................................................................................................................................ 5
Calculation of NPV (Alternative options) .................................................................................... 5
Beta analysis along with recommendation ..................................................................................... 7
Recommendation on Kidman resource management with alternative solution .............................. 7
Conclusion ...................................................................................................................................... 8
Reference List ................................................................................................................................. 9
4
Introduction
Kidman Resources Limited is a lithium developer company. In this report, a detailed analysis of
the Weighted Average Cost of Capital (WACC) of the company, a detailed analysis of the Net
Present Value (NPV) of the company, and the beta analysis of the company is done, if any risks
or strengths of the company are there.
Part A
Calculation of Kidman’s WACC using market data
The Weighted Average Cost of Capital is generally referred to as company’s cost of capital. It is
the rate, which is expected for the company to pay to all of its stakeholders to measure its assets.
A low WACC than the company yielded return means that the position of the company is good
and the shareholders will be interested for investing money on the company.
Formula of WACC
Where,
E= Market Value of Equity
D=Market Value of Debt
V=E+D
5
Re=Cost of Equity...