Instructions on Team Formation, Written Project Report and Oral Presentation: 1. Team Formation: Students self-form a team. Each group will be responsible for completing one project. That is, each...

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Instructions on Team Formation, Written Project Report and Oral Presentation: 1. Team Formation: Students self-form a team. Each group will be responsible for completing one project. That is, each team will choose a firm (in consultation with the instructor) that will be analyzed using the tools discussed in class. 2. The first page of your report should only include the following: course title and semester, company name, team information, and an executive summary that clearly states your recommendations. The executive summary should be single spaced. 3. The rest of your report should be double-spaced and includes your analysis of the company. All exhibits, such as figures, tables, and calculations should be clearly labeled and referenced, and placed at the end of your report. Pages should be numbered. Times New Roman font 12 is preferred. 4. Format of the Report: starts with a brief introduction of your company, followed by your detailed analysis, and ends with conclusion. For the analysis part, use subsections (with subtitles) to address the questions (refer to the next page for questions). Clear and concise writing is rewarded. 5. Oral presentation should include, at a minimum, an introduction, your detailed analysis, and conclusion/comments/recommendation. Be prepared to answer questions raised during presentation. 6. The project will be graded based on both written report and oral presentation. Only one grade will be assigned to the team. To receive a good grade, the team has to address the following questions: 1. Perform the ratio analysis using your company’s most recent three years’ financial statements. Assess the performance of your company relative to its past and its peers (pick three peers). 2. Estimate the sustainable growth rate based on the most recent financial information. Prepare the pro forma income statement and balance sheet for the upcoming year based on this rate. How much external funds are needed to support the growth? What options do your propose to finance it? 3. Calculate the free cash flows (FCFs) for the last three years as well as the average FCF growth rate over that period of time. Assume that the FCF will grow at a rate of 3% (or a different rate) higher than the average rate for the next four years and settle at the average rate indefinitely. Estimate FCFs for the next five years. 4. Calculate the weighted average cost of capital (WACC) based on the most recent information. • Estimate the cost of debt. • Estimated the cost of equity based on both the dividend model and the CAPM. • What are the weights of debt and equity on market value basis? • Calculate WACC. 5. Use your FCF estimates in #3 and WACC in #4 to find the value of the company and the value of the stock today. 6. Use the averages of P/E ratio and M/B ratio of your peers to estimate the share value of your stock. 7. What would be the value of your company’s stock based on your analysis above? List of firms not to pick: Apple Boeing Chevron Costco CVS Dollar Tree Gap Google Home Depot Johnson & Johnson Tesla Any retail or financial firms. Also, ensure that your firm is publicly traded and does make a profit