Team Valuation Report: Semester 1, 2021The company selected for this report is:Fortescue Metal Group Limitedcode: FMGYour team (comprising 4-5 students who can be from different classes) is requested to advise awell-diversified high net-worth in-dividual who is interested in investing in shares with afundamental value greater than the share price. As a financial analyst, you are required towrite a detailed recommendation report on whether to invest in the selected company.The report shall be structured in 5 Sections (preceded by a brief executive summary) to addressthe following questions of your client:1. What are the competitive forces behind the industry’s structure? How does competition affectthe margins of the industry and the company? How does the company’s profitability comparerela-tively to its peers (you should select between 3 and 5 industry peers)? What is the firm’sbusiness strategy? Please highlight potential investment risks the company could face in thefuture (please refer to Lectures 1 and 2);2. Analyse how the market is pricing the firm using different relative (or market) valuationtech-niques. Please use the same group of industry peers identified in the previous section(please re-fer to Lectures 3 and 4);3. Estimate carefully the cost of debt, cost of equity and cost of capital for this company (pleasere-fer to Lectures 6 and 7);4. Estimate the free cash flows of the company (please refer to Lectures 8 to 10);5. Estimate the target price of the company, issue a buy/hold/sell recommendation to yourclient, and draw your conclusion. (please refer to Lectures 11).Your submission should contain all of the following: (i) A 7-to-10-page recommendation report (in font Times New Roman – font size 11) in Word or PDF, discussing the scope of the work, your justified assumptions, findings and recommen- dation. Please refer to examples of professional analyst reports (available on iLearn) when formatting your team report; (ii) A cover page indicating: (a) your team name; (b) each member's name, student number, email address, and contribution table shows contribution for each (equal contribution is assumed without notifying me). Please also identify the team leader for email correspondence. Your cover page should be the first page of your assignment, and is not counted in the limit of 10 pages; (iii) The leader is expected to maintain a weekly journal, registering the contribution of each team member during the week. A copy of the Journal must be submitted with the assignment. It’s not included in the page limit.(iv) A spreadsheet model (in Excel), showing all your numerical assumptions, calculations,steps of the estimation, and company’s valuation.ONLY the team leader should submit the equity report to the Turnitin link that will be activatedon iLearn. The team leader should also submit the Excel file containing all the calculations in aseparate folder that will also be available on iLearn. Please give both these files your team name(e.g., BestTeamEver01.xls, and BestTeamEver01.doc or BestTeamEver01.pdf). Moreinformation on the submission process will be provided in class from Week 10.The marking criteria will be as follows:Criteria MarksAssumptions and bases 10Numerical accuracy 10Interpretations and Recommendation 10Overall quality of the report (format and language) 10Total 40Note:-Use sub-headings that contain the question number as a title. Answer the questions in the orderthey're asked.-Write in a 'front focused' manner. State the most important things up front. For example in ques-tion 5, state your buy, hold or sell recommendation, fair value estimated stock price and actualmarket price in the very first sentence.-Extra evidence such as graphs and tables is highly desirable. They must be placed in-text. Figuresor tables should be placed directly above or wrapped in the paragraph that they are discussed in.Do not put figures in the appendix; they will not be marked. Also note that your written test filewill usually be the only thing that we read and examine. The spreadsheet will only be used tocheck for inconsistencies.-Use in-text referencing of sources. For example: "...the equity premium relative to long-term gov-ernment bonds was an annualized 3.8%. The expected equity premium is lower, around 3% to3½% on an annualized basis." (Dimson et al 2011). Put a bibliography at the end of your assign-ment: Dimson, Elroy and Marsh, Paul and Staunton, Mike, Equity Premia Around the World (Oc-tober 7, 2011). Available atSSRN: https://ssrn.com/abstract=1940165 or http://dx.doi.org/10.2139/ssrn.1940165