MAF203 Business Finance – Trimester 1 2024 Assessment Task 2

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MAF203 Business Finance – Trimester 1 2024

Assessment Task 2 – Group Assignment

DUE DATE AND TIME: 6 May 2024 by 8:00PM AEDT

PERCENTAGE OF FINAL GRADE: 40%

WORD COUNT LIMIT: 1500 words

In today's dynamic and ever-evolving professional landscape, the ability to work collaboratively has become important for success. As we navigate an era marked by transformative changes in organizational structures and managerial roles, it is crucial to recognize the growing significance of teamwork. This shift is not merely a buzzword but a reflection of real changes happening in workplaces worldwide. In this context, Zhang's (2023) groundbreaking study sheds light on the changing nature of managerial roles, emphasizing collaboration as a key element. Zhang's research highlights a fundamental transformation in managerial roles, emphasizing collaboration over traditional supervision. This shift is not merely organizational but reflects a broader trend in the professional landscape.

You, as students, are encouraged to recognize the changing culture in organizations, where collaboration is increasingly becoming the cornerstone of success. In a world where the expectations of managerial roles have evolved, the ability to work effectively in a team is more than just advantageous – it is a key asset. By embracing teamwork, students align themselves with the dynamic nature of contemporary workplaces and position themselves as valuable contributors to collaborative environments. Zhang's findings suggest that collaboration is not only integral to innovation-focused firms but is a sought-after skill across diverse sectors. Therefore, understanding and valuing the power of teamwork not only enhances academic experiences but also prepares you for the collaborative demands you will encounter in your future careers.

Zhang, L. (2023). The changing role of managers. American Journal of Sociology, 129(2), 439-484.

a. Description of the task

This assessment task is designed to assess your skills on:

(1) analysing information from a company’s annual report

(2) Understanding and interpreting the relation between interest rate, bond prices and duration

(3) valuing a company using a discounted dividend valuation technique

(4) valuing a company using a market-based valuation technique, and

(5) assessing whether a company’s share price is overvalued or undervalued

(6) writing about your experience while working on the assignment.

Since this is a group assignment, it is expected that you will solve the assigned problems in groups. Please note that not all parts are equal.  For example, Part 1 is very easy compared to Part 2. Similarly, Part 5 critically analyses parts 3 and 4 and forms a conclusion. Part 6 is about your experience. Therefore, it is essential to solve this assignment in the group. This is important because every group member should achieve the set-out unit learning outcomes for this task. It is also important because all unit learning outcomes will be assessed in the final exam.

The task is framed as a series of requests that a finance manager might request of your team, expecting that you will provide them with clear recommendations supported by accurate and substantiated calculations.

Task Requirements:

This assessment task has six parts, and you must complete ALL questions. Use Excel for numerical calculations.

Part 1 – About the Company (20 marks) (up to 400 words)

1. Download the 2023 annual report of VCX from the unit site.  Carefully study the board of directors of the firm. Evaluate the effectiveness of the board. Explain your answer clearly. What is the advantage of having an effective board?

2. Based on the 2023 annual report of VCX group, what are the different macro-economic, industry specific and firm-specific risks that the company faces? Explain why your group thinks a particular risk is firm-specific, industry specific or macro-economic.  

3. Based on the 2023 annual report, what steps has VCX Trust has undertaken to minimise its environmental impact? In your view, what other actions VCX could take to minimise its environmental effects further?

Part 2 – Relation between Interest rate, bond prices and duration (30 marks) (up to 300 words)

1. Bond A is a coupon bond. It has a face value of $100. The coupon rate is 5%, and the market interest rate is 10%. The bond matures in 30 years. Using Excel’s functions, calculate price and duration of bond A.

2. Calculate the bond price (column 3) and duration (column 2) for all yield to maturities given in the below table.

3. Calculate bond price change (column 4) using bond price calculated in column 3 of the table. For example, bond price changes when yield to maturity 13% vs yield to maturity 14%, and so on.

4. Calculate bond price change using duration (column 5) for all yield to maturities given in the table below.

5. Plot yield to maturity on x -axis and duration on y-axis. Is the plot straight line (linear) or a curve (non-linear)?

6. Plot yield to maturity on x-axis and bond price on y-axis. Is the plot straight line (linear) or a curve (non-linear)?

7. Plot bond price change calculated in Q(3) and Q(4) on y-axis and yield to maturity on x-axis.

8. Are the bond price changes calculated in Q(3) and Q(4) the same or different. Explain your answer clearly.

Yield to maturity	Duration	Bond Price	Price change using Bond Price in column 3	Price change using duration in column 2
14%
13%
12%
11%
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%

Part 3 – VCX Valuation (20 marks) (up to 200 words)

Download the “VCX_div_competitors.xslx” file. The sheet named “VCX_Dividends” shows VCX’s dividend history.

1. In your group’s opinion, which dividend discount model is more appropriate to estimate VCX’s share price? Provide your reasons.

2. Calculate the share price of the VCX using the dividend discount model identified in Part 3 Q (1).

Hint: Assessment 1 can provide the other input(s) required to estimate the value of VCX’s share.  

Part 4 – Relative Valuation (10 marks) (up to 200 words)

Download “VCX_div_competitors.xslx” file. The sheet named VCXCompetitors has the list of VCX’s competitors. Calculate the share price of VCX using the relative valuation approach. If you exclude any of the firms in your analysis, justify why.

Part 5 – Is VCX overvalued or undervalued? (10 marks) (up to 100 words)

2. In Part 3 Q (2), your group calculated the share price of VCX using the dividend discount model. The share price of VCX in June 2023 was $1.84. Based on the above information, is VCX overvalued or undervalued? Explain clearly.

3. In Part 4, your group calculated the share price of VCX using the relative valuation model. The share price of VCX in June 2023 was $1.84. Based on the above information, is VCX overvalued or undervalued? Explain clearly.

4. Provide your group’s conclusion on whether VCX’s share is overvalued or undervalued. Explain your answer clearly.

Part 6 – Your Experience while doing this assignment (10 marks) (up to 300 words). Note: Each member in the group will answer these two questions.

1. How well did you and your group communicate overall while doing the assignment?

2. What are some of the most exciting discoveries you made while working on the assignment? About the assignment? About yourself? About your team members?

b. Specific Requirements

Your Assignment submission must contain the following:

- Write complete sentences when you are explaining your answers.

- Upload one Excel file to the MAF203 assignment Dropbox with all the workings for relevant parts. This submission is necessary to check your calculation in the assignment.

- Word or .pdf file with all the workings (and relevant snapshots from your Excel file) for all parts should be uploaded for your group to the MAF203 assignment Dropbox, including:

o Title page: With group number, student names and student IDs for all members

o Body/Content: All responses should be structured and numbered. All quantitative calculations should show your calculation steps, explained as required. You must explain which formula you are using to work out the question and copy and paste the important output of the Excel spreadsheet to the body of your Word document.

o Aspects not required: Executive summary, Introduction and Conclusion.

- The assignment weighs 40% of your overall mark for the unit.  The assignment allocates 100 marks across all parts. Your group mark will be converted to a score out of 40.  All members of the group will receive the same mark.

c. Learning Outcomes

This task allows you to demonstrate achievement towards the unit learning outcomes. The ULOs are aligned with specific graduate learning outcomes – that is, the skills and knowledge that graduates are expected to have upon completing their studies – and this assessment task is an essential tool in determining assurance of learning.

If you do not demonstrate achievement of the unit learning outcomes, you will not be successful in this unit. It is good practice to familiarise yourself with the ULOs and GLOs as they guide the knowledge, understanding, and skills you are expected to demonstrate upon completing the unit. In this way, they can be used to guide your study.

The learning outcomes assessed in this task are:

Unit Learning Outcome (ULO)	Graduate Learning Outcome (GLO)
ULO 1: Comprehend the conceptual foundation for financial decision-making in a typical business firm.	GLO1: Discipline-specific knowledge and capabilities
ULO 3: Apply relevant analytical techniques for valuing bonds and shares, short-term and long term investment and financing decisions and working capital management.	GLO1: Discipline-specific knowledge and capabilities GLO4: Critical thinking GLO5: Problem Solving

a. Submission

It is the responsibility of all group members to read the whole assignment before submitting it. This is to maximise your chance to get a good grade on the assignment. You must finish your assignment well before the due date. You should be able to complete this assignment by the end of week 6, and the assignment is due in week 9. If you finish it on time, there is enough time for everyone to read the complete assignment and fix any errors.

Submit your assignment in the Assignment Dropbox in the MAF203 CloudDeakin unit site on or before the due date.

When uploading your assignment, name your word document and excel spreadsheet using the following syntax: <your group number_your Deakin student ID number_[MAF203].doc (or ‘.docx’); : <your group number_your Deakin student ID number_[MAF203].xls (or ‘.xlsx’). For example,  Group_XXX_123456789_ABC123.doc’.

Only one group member should submit the assignment on CloudDeakin on behalf of the entire group. Assignments sent as an email attachment or by mail will not be accepted under any circumstances.

Submitting a hard copy of this assignment is not required.

You must keep a backup copy of every assignment you submit until the marked assignment has been returned to you.  In the unlikely event that one of your assignments is misplaced, you will need to submit your backup copy.

Any work you submit may be checked electronically or by other means to detect collusion and plagiarism.

When you submit an assignment through your CloudDeakin unit site, you will receive an email confirming that it has been submitted to your Deakin email address. You should check that you can see your assignment in the Submissions view of the Assignment Dropbox folder after upload, and check for, and keep, the email receipt for the submission.

b. Marking and feedback

The marking rubric for this task will be available in the MAF203 CloudDeakin unit site - in the Assessment folder (under Assessment Resources).

It is always a valuable exercise to familiarise yourself with the rubric before completing an assessment task. Rubrics act as a boundary around the task and help identify what assessors are looking for specifically in your submission. The standards are drawn from the unit’s learning outcomes ensuring they align with appropriate graduate attribute/s.

Identifying the standard you aim to achieve is also a valuable strategy for success, and to that end, familiarising yourself with the descriptor for that standard is highly recommended.

Students who submit their work by the due date will receive their marks and feedback on CloudDeakin 15 working days after the submission deadline.

c. Extensions

Follow the Assignment Extension policy that you have received from the Faculty.