PLEASE READ ALL THE INSTRUCTION UNTIL THE END BEFORE YOU START.
SCHOOL : westcliff university
subject: bus505 professor :Nima Salami
PA2 included two parts: Part 1 about evaluating beta and WACC, and Part 2 is about data
acquisition in preparation of the CLA2. You need to do both parts to demonstrate your
comprehensive evaluation of the company’s opportunity cost as well as your skills in retrieving
and organizing historical data on securities for the purpose of portfolio formation.
1. Search Yahoo Finance, or any other credible source to retrieve the most recent income
statement and balance sheet for a major leveraged corporation.
a. Provide these statements in proper format and include a screenshot of the data.
b. Retrieve the data on the company’s historical data and calculate annual rate of
return by using adjusted closing prices for the past 20 years. using adjusted closing
values the past 20 years.
c. Using the data on the company’s stock rate of return and the index’s rate of return
estimate beta of the corporation. Compare this value with the value stated by the
source.
d. Retrieve the risk-free rate of return as the annual interest rate of US treasuries.
Based on these values estimate the expected annual rate of return of the
corporation’s security. Compare your estimate with the expected rate of return as
evaluated based on your data in part b.
e. Using the financial statements mentioned above estimate the annual rate of interest
paid by the corporation (cost of debt). Also, find the tax rate and capitalization ratio
(proportions among equity and debt). Using these values that you have found
estimate the annual weighted cost of capital (WACC) of the corporation.
2. This part of the assignment is in preparation for CLA2. Choose 5 major securities from
different industries, among which one can be the one you chose in part 1 of the
question, Retrieve the data on the companies’ historical data and calculate annual rate
of return for the past 20 years for each security.
3.4. Please, consider the information you obtained in answering part 1 of the above
again . Suppose that the corporation is offered an investment which has the following
cash flows. (attached picture "TABLE 2 )Please justify if the project is feasible based on WACC that you calculated
in the above question .
****IMPORTANT****** WORD LIMIT 750
Provide your answers with explanations and definitions in detail and be precise. Comment on your findings.
Provide references for content when necessary.
Provide your work in detail and explain in your
own words.
Please use a word document for this assignment, you can use excel to calculate and screenshot the calculation and post on the the document file. YOU MUST SUBMIT THIS ASSIGNMENT IN WORD DOCUMENT File .
Support your statements with six (6) peer-reviewed in-text citation(s) and
reference(s). WORD LIMIT 600.
The 6 peer reviewed reference articles can be found in the LIRN library in my school website.
!!! PLEASE use at least 6 sources to write the paper !!!
Gap.westcliff.edu
ID - b182396
Password: Westcliff#136
After you enter to the mainpage scroll down and you will see a big yellow balloon logo with letter "LIRN" thats the library where you access to the sources.
!!! PLEASE use at least 6 sources to write the paper !!!