only the calculation part of the assignment (part 2 of the assignment)
Fundamentals of Finance Final Assessment: Outline and Rubric Purpose of this Assessment The Final Assessment for this competency is to complete one essay and a series of financial calculations that address financial systems, ethics, valuation of stocks and bonds, evaluating risk, capital structure, capital budgeting decisions, and working capital. Items Required for Submission In order to demonstrate mastery of this competency, you will submit: 1. Financial calculation spreadsheet 2. A 2-3 page paper on wealth maximization and ethics as noted below in Step Three. Step ONE: Preparation In order to prepare for this assignment, it is important to carefully read this document in its entirety before starting the Final Assessment. Ensure to review each required item and submit the essay and calculations that align with the rubric. When reviewing each problem, the following questions should be considered: 1. What possible tasks are required? 2. What will you need to complete the essay and problems? 3. What formulas will you need? 4. What resources from this competency might you reference to complete this Final Assessment successfully? 5. Think about possible plans of action for the steps you will take – what strategies will you use to address each problem? Final Assessment: Outline and Rubric 1 Fundamentals of Finance Final Assessment: Outline and Rubric Step TWO: Calculations Part 1: Financial Calculations The following financial calculations were covered in the competency content. Calculate the following seven problems showing formulas for the ratio as well as the answer. Use the provided Calculation worksheet to include the calculations, computation details (showing your work), and answers. Problem #1 - Time Value of Money a) If a project costs $74,000, will earn $24,000 per year for the next four years, and has a discount rate of 5%, what is the Net Present Value? b) What is the present value of an annuity due with a payment of $500 per year at an interest rate of 9% for 15 years? Problem #2 - Interest Rates and Bond Valuation a) Using the following information: $1,000 par value, 11% yield, coupon payment of $100 annually, 10 years to maturity: 1) Calculate the price of the bond 2) If the coupon rate is 8%, calculate the yield to maturity b) Using the Fisher equation, what is the nominal interest rate if the real rate of interest is 4% and the rate of inflation is 9%? Problem #3 - Stock Valuation a) A company has 10 million shares of common stock selling at $50 per share. It pays a dividend of $4 this year and the dividend is growing at 5% annually. Using the Dividend Discount Model, what is the cost of equity? b) If investors require a 7% annual return on a 10% preferred stock with a par value of $100, what should the stock price be? Problem #4 - Calculating the Expected Rate of Return a) Stock ABC has a beta of .7, the risk-free rate is 3%, and the expected market returns are 4%. Using the Capital Asset Pricing Model, what are the expected returns for stock ABC? b) Using CAPM, what is the cost of equity if the risk-free rate is 4%, market return is 6%, and beta is 1.2? Problem #5 - Raising Capital and Capital Structure a) A firm believes that if their Earnings before Interest and Taxes increase by 2%, their net income will increase by 4%. What is their degree of financial leverage? Problem #6 - Capital Budgeting Techniques a) If a project costs $74,000 and will earn $24,000 per year for the next four years, and has a discount rate of 5%, what is the: Final Assessment: Outline and Rubric 2 Fundamentals of Finance Final Assessment: Outline and Rubric 1) Payback period 2) IRR Problem #7 - Working Capital and the Cash Conversion Cycle a) Given the following information: inventory = $20,000, Daily cost of sales = $1,000, Receivables = $12,000, daily revenue = $4,000, payables = $8,000, daily purchases = 800, calculate: 1) Inventory conversion period 2) Receivables conversion period 3) Payables conversion period 4) Cash conversion period Step THREE: Short Answer/Essay Part 2: Essay on Ethical Considerations The first section of this competency covers financial systems and goals of a firm. Specifically, under ethical considerations, impediments to wealth maximization are identified. In a 2-3 page, APA formatted paper, address the following four areas: 1. Impediments to Wealth Maximization: One impediment to wealth maximization mentioned in this competency is the agency problem. Identify and describe two agency costs mentioned in the competency and how they impact employees and their benefit compensation package. 2. Socially Responsible Corporate Behavior: In this section of the paper, research corporate social responsibility. Define and describe corporate social responsibility and the impact to customers, employees, investors, environment, and financial strength. Include two outside sources to support your definition. 3. Ethical Considerations: a. In this section, research a company that has behaved unethically in terms of corporate social behavior. Explain how they behaved unethically and why they acted accordingly. Describe how their financial strength was impacted by this behavior. Provide a link to the company’s Annual Report that indicates the impact to their financial strength. b. Research a company that has exemplified ethical behavior and describe how they illustrated ethical behavior and corporate social responsibility. Reflect on their behavior and include your opinion if their financial strength was impacted by their actions and behavior. Provide a link to the company’s Annual Report that indicates the impact to their financial strength. This paper should be 2-3 pages in length, Times New Roman 12-point font, and proper APA format. Final Assessment: Outline and Rubric 3 Fundamentals of Finance Final Assessment: Outline and Rubric Step FOUR: Complete Checklist for Submission Before you submit your work, check to see if you have met the criteria noted below. Did you: ✓ Using the provided worksheet, ensure all 7 calculations are included, showing the formula, the calculation, and answer for each ✓ Correctly show the formula for each calculation ✓ Clearly show your work for each calculation ✓ Clearly and completely addresses Impediments to Wealth Maximization ✓ Clearly and completely addresses Socially Responsible Corporate Behavior ✓ Clearly and completely addresses Ethical Considerations for two companies ✓ Ensure the essay portion is 2-3 pages in length, APA format, Times New Roman font ✓ Ensure all rubric areas have been addressed Step FIVE: Submit Your Work ● Your completed files should be submitted through the Final Assessment page of your competency. ● Please note, for files smaller than 10MB (e.g., most Word documents), use the corresponding “+UPLOAD STUDENT FILE” button to upload your Final Assessment documents. For larger files of any type (e.g., voice over PowerPoint files, video presentations), please use the optional TEXT EDITOR to provide a URL where your tutorial faculty can download your file. ● How you create a download URL is up to you, but various free online providers, including Google Drive and Dropbox, offer this service. Please make sure that the URL you provide can be accessed by anyone with the link. For further instructions on how to create public links for uploaded files, consult the support pages for your chosen provider. List of Templates/Resources Needed The following are some resources that could provide support in your completion of this assignment: ● Calculation worksheet Final Assessment: Outline and Rubric 4 https://docs.google.com/spreadsheets/d/15QknvtFD2jFIFBcqCS4rZYZ7UBxk2MzRBOxk_qNBPO4/copy Fundamentals of Finance Final Assessment: Outline and Rubric Scoring Rubric for Final Assessment Final Assessment: Outline and Rubric 5 Criterion EMERGING DEVELOPING PROFICIENT EXEMPLARY Financial Calculation: Time Value of Money Does not answer all parts of each question completely and provides a weak analysis and evaluation of results where applicable. Partially answers all parts of each question completely and accurately, showing and explaining all steps, calculations, and solutions clearly, and insightfully analyzing and evaluating results where applicable. Mostly answers all parts of each question completely and accurately, showing and explaining all steps, calculations, and solutions clearly, and insightfully analyzing and evaluating results where applicable. Answers all parts of each question completely and accurately, showing and explaining all steps, calculations, and solutions clearly, and insightfully analyzing and evaluating results where applicable. Financial Calculation: Interest Rates and Bond Valuation Does not answer all parts of each question completely and provides a weak analysis and evaluation of results where applicable. Partially answers all parts of each question completely and accurately, showing and explaining all steps, calculations, and solutions clearly, and insightfully analyzing and evaluating results where applicable. Mostly answers all parts of each question completely and accurately, showing and explaining all steps, calculations, and solutions clearly, and insightfully analyzing and evaluating results where applicable. Answers all parts of each question completely and accurately, showing and explaining all steps, calculations, and solutions clearly, and insightfully analyzing and evaluating results where applicable. Financial Calculation: Stock Valuation Does not answer all parts of each question completely and provides a weak analysis and evaluation of results where applicable. Partially answers all parts of each question completely and accurately, showing and explaining all steps, calculations, and solutions clearly, and insightfully analyzing and evaluating results where applicable. Mostly answers all