InstructionStudents have to answer task 1, and two out of three other tasks, and provide the procedure of workings.Each student is assigned a listed company on London Stock Exchange (Please check the Canvas)
Word limit of this assignment is (1400 – 1500) words excluding references and tables.
Task 1: Project Appraisal Magnolia-hardware company is considering expanding its highly successful online game franchise to the ”Board Game” or ”Trading Cards” environment. The company has decided that it will invest in one project but not both. Consider the following cash flows of the two mutually exclusive projects. Assume the discount rate for Magnolia-hardware is 8 per cent.1.Calculate the payback period and discounted payback period of these two projects. [10 marks]2.Calculate the NPV of these two projects. [10 marks]3.Draw the NPV profile of these two projects in the same graph. [10 marks]4.Considering the above results, explain critically which project do you choose? [10 marks]Task 2: Investment OpportunitiesMr Adam is 25-year old. He recently received £25,000 from his parents and wants to invest this fund for at least 20 years. He has a job with saving of£500 per month. He comes to you as his financial advisor seeking for investment advice.1.Provide a list of potential investments opportunities for Mr. Adam. [15 marks]2.Considering his age and financial condition, what is your financial advice? [15 marks] Hint: consider different investment options in money and capital market.Task 3: Cost of CapitalThe activities of Tesco are financed by both debt and equity.You are required to collect the following information and calculate the weighted average cost of capital (WACC) of Tesco.Market Cap of Tesco. [5 marks]
What is the weighted average cost of capital (WACC) of Tesco? (Hint: according to IG market, the average of recent yearly returns of FTSE100 as proxy of UK market is 7.5%; UK corporate tax rate is 19%). [10 marks]
2.Long-term Debt of Tesco. (From the recent released balance sheet of company) [5 marks]3.Beta of Tesco as measure of systematic risk. [5 marks]4.10-year Bond rate of UK government as proxy of risk-free rate. Task 4: Risk and Return Extract the weekly price of assigned company to you and FTSE250 for one year and show the results of the following items:1.Show the weekly return of the company and FTSE 250 in the same graph. What is your interpretation of the change of return of the companycomparing with the market index? [15 marks]2.Calculate the weekly standard deviation and return for both the company and FTSE 250. What is your interruption of the risk and return ofthe company comparing with the market index? [15 marks]check the attached files for more information
