hi,I have attached a file of assignment requirement. Its a Business Valuation assignment of accounting. Please read the instructions and requirement. We can choose any one of the two listed topics in the assignment. If you have any question, please let me know. Thanks
8 MBS665 BUSINESS VALUATION OBJECTIVES This assignment can help the students apply the theories of business valuation in the real practices of analysis. It aims to test the following abilities of students: 1. basic understanding and knowledge of valuation theory; 2. proficiency and profession in using valuation tools and making business analysis. Instructions Assignments must be edited and neatly presented in a professional format. The results or summaries of your calculations and your comments must be shown in the body of the report. The data collected and details of calculations can be shown in appendices to the report. Make your report look professional and reader friendly. The length of the report should not exceed 1000 words (Excluding reference and appendices). Use 12-point font size, 1.5 spaces of lines and standard margins. In doing this assignment, you are encouraged to refer to the texts and any other material that may assist you in understanding what you are doing in this assignment. Ensure that you give adequate cross references to the sources from which you have gathered information in compiling your report (APA style). Report presentation/organisation The report should be structured as follow (necessary tables and figures with appropriate analyses are required to appear main context): Title Executive Summary or Introduction Section One (with subtitle) Section Two (with subtitle) Section Three (with subtitle) Section Four (with subtitle) Reference list Appendix Marking Guide Section One: Identify and display your chosen question. Introduce the report (what did you do, why did you do, how did you do, your findings and conclusions). [10 marks] Section Two: Analysis (theory? tools? Evidence? numbers? supports?) [35 marks] Section Three: Discussion (findings? applications?) [30 marks] Section Four: Summarise your calculations, findings and comments and provide suggestions and proposals if necessary. Then conclude your report. [15 marks] The remaining 10 marks will reward the report presentation/organisation. LISTED TOPICS You can choose any one of the following: (Any one) Topic 1 (Prospective analysis: Forecasting) Qantas is, Australia's largest airline. Running an airline is capital intensive with large expenditure on planes. Airlines do not keep their planes for the same length of time, and this difference is reflected in their respective depreciation policies. Figure 6.11 relates to Qantas PPE for 2017 and 2018. Assume that all of the PPE is for aircraft and engines. FIGURE 6.11 Qantas PPE, 2017-18 Qantas (in $millions) 2017 2018 PPE, at cost 25940 27534 Accumulated depreciation -13687 -14683 Net book value of PPE 12253 12851 depreciation expense 1276 1401 Net cash payments for PPE 1334 1942 Assume that Qantas uses straight-line depreciation for its planes and that it expects its planes to have zero residual value. Required: · Estimate the depreciation expense to average net book value of PPE for 2018. · What does your answer to the previous question imply about the expected useful life of Qantas' planes? · Assume that the expected useful life of the planes does not change. Also assume that Qantas spends $2000m on planes in 2019, and makes this purchase on the first day of the 2019FY so there is a full year of depreciation from 2019 depreciation expense for Qantas. This will include the depreciation of the planes held at the end of 2018, and the additional depreciation from 2019 purchases. · Forecast the 2019 closing balance of PPE, both at cost and at net book value. Topic 2 (Prospective analysis: valuation theory any concepts) Figure 8.10 show total assets, book value and market, value of equity, equity beta and analysts' consensus earnings forecasts for CSL, Woolworths and Xero. CSL Is one of Australia's leading biopharmaceutical companies, Woolworths is one of the two largest grocery retailers, and Xero provides online accounting software. As part of the following calculation, assume that the Australian government 10-year bond is yielding 2.75% and the equity risk premium is 5.0%. FIGURE 8.10 Total assets, book value and market value of equity, equity beta and analysts' consensus earnings forecasts for CSL, Woolworths and Xero CSL Woolworths Xero Total assets ($m) 17559 23 491 929 Shareholders' equity Book value 7488 10 669 338 Market value 97 425 41 826 6829 Equity beta 1.15 0.56 2.32 Analyst forecast of next year's earnings ($m) 3076 1826 14 Required: a Compute the CAPM estimate of cost of equity capital for each firm. b Calculate normal or required earnings for each firm. c Calculate abnormal (residual) earnings for each firm d What do the different amounts of abnormal earnings imply for each firm? Do they help explain the differences in market value of equity of the three firms? 1