FINC3304 (BUSINESS FINANCE) MINI-PROJECTSSpring 2021 Instruction:1.The purpose of the three mini-projects is to strengthen your financial and quantitative analysis abilities. There are 200 points for the three mini-projects. You are required to show your working process and discuss your findings in details. You need to work on the final project in Excel. Your final mini-project report should be well-organized and typed in a Word file. Both your Word report and Excel files are required to be submitted to the instructor using the Final Project Submission Tool in Blackboard. Missing any documents will be considered as incomplete. The style and organization of the project accounts for 10 points.
You are expected to work on the work independently. The due date for the project is 11:59pm on Sunday, May 9.
Mini-Project 1: Mortgage Loan Analysis (50 points):You plan to buy a house in June 2021. The sale price is $308,000. You need to pay 20% down payments and borrow additional 80% from Wells Fargo with a 15-year, 3.0% fixed-rate mortgage loan. You need to pay an equal MONTHLY payment starting from July 1, 2021 for a total of 15 years.(1) Calculate your expected monthly mortgage payment.(2) Develop the full amortization table for your mortgage loan.(1)When you prepare your 2021 tax filing, what is the total mortgage interest payment that you can consider for the tax deduction?Mini-Project 2: Capital Budgeting Analysis (50 points):A firm is planning a new project that is projected to yield cash flows of -$239,000 in Year 1, $225,000 per year in Years 2 through 4, and $338,000 in Years 5 through 6, and $337,000 in Years 7 through 11. This investment will cost the company $1,580,000 today (initial outlay). We assume that the firm’s cost of capital is 9.28%.(1) Draw a time line to show the cash flows of the project.(2) Compute payback period, net present value (NPV), profitability index (PI), internal rate of return (IRR), and modified internal rate of return (MIRR).(3) Discuss whether the project should be taken.Mini-Project 3: Weighted Average Cost of Capital (100 points):Find the 2020-2021 financial statements (Balance Sheet, Income Statement) for a publicly-traded company in the information technology industry (i.e. Semiconductors & Semiconductor Equipment, Software, Technology Hardware, Storage & Peripheral) from UHV Mergent Online database, Yahoo! Finance, Google Finance, or other financial data sources. Each student should choose a different company at your choice.(1) Conduct a financial ratio analysis of the company.(1) Estimate the weights of capital (debt, preferred stock, and common stock) for the company.(2)Estimate the before-tax and after-tax component cost of debt for the firm.(3)Estimate the component cost of preferred stock (if applicable) for the firm.(4)Estimate the component cost of common equity using CAPM for the firm.(5)Compute the firm隆炉s weighted average cost of capital (WACC). Discuss your findings.you can obtain historical financial statements for a publicly-traded company from UHV online library by clicking http://libguides.uhv.edu/content.php?pid=230772&sid=2399568 to access the library online resources. In the database Mergent Online, you can find financial data for most U.S. publicly-traded firms.2.How to obtain the industry ratios for the project?For the financial ratios for your industry, please do the following: Go to the Library home page at http://vcuhvlibrary.uhv.edu/ click Database, and then find D&B Hoovers (the first item). Assuming you are off-campus, you will need to identify yourself as a UHV student using the drop-down box at the top, then log in using your Blackboard login and password. When you get to D&B Hoovers, Click Research Industries, enter your NAICS code in the box with the heading “Search industries” and press ENTER. The resulting page offers the industry information data available for your industry.
