澳大利亚纽卡斯尔大学 企业融资 个人作业
GSBS6130 Corporate Finance
个人作业
Individual Assignment
2011年第二学期
Trimester 2, 2011
Instructions:
这份作业必须完成并提交，一定要由你自己独立完成。
1. This assignment must be prepared and submitted individually, the work you submit must be your own.
对于左右的问题你都必须做出你自己的解答。
2. For all questions you are required to show all workings.
3. Unless otherwise instructed, round your answers to two decimal places.
4. This assignment will contribute towards 30% of your total assessment.
5. The due date and time for this individual assignment is
11:59pm AEST, 24 July 2011.
6. You may use Microsoft Excel to perform calculations,however Microsoft Excel workbooks cannot be submitted through Turnitin. Turnitin only accepts Word and PDF documents so you will need to copy any workings from Excel into your Word document.
第一题 14分
Question 1 14 marks
货币的时间价值
Time Value of Money
从最近以来的金融课程了解到，你已经开始更多地关注您的退休储蓄。
Since recently enrolling in a finance course, you have started to pay more attention to saving for your retirement.
为了满足你退休所需要的资金，您计划在30年后退休，你可以每年存款10000美元。首次存款和随后的存款将在以后每年的这个时候开始计算。
You plan to retire 30 years from today and in order to fund your retirement assume that you can save $10,000 per year. The first deposit will be made immediately (today) and subsequent deposits will be made at the start of each year after today.
You will then retire at the end of the 30th year.You plan to invest all your retirement savings into 10 year government bonds as you are risk averse and appreciate the “risk-free” nature of government bonds.
假设在整个期间的投资利率保持不变，并且忽略税收的影响。
Assume that for the entire period of your investment interest rates remain unchanged, and ignore tax implications.
Required:
a) Go to the RBA website and click on Statistics, then under the heading of Statistical Tables click on Interest Rates. Find the interest rate on 10 year government bonds as at 1 June 2011. Use this interest rate for all other parts of this question, and assume it is a rate per annum compounding yearly. (1 mark)
b) How much will you have saved in your retirement account on the day that you retire? (2 marks)
c) Instead of investing $10,000 per year you wanted to make a lump sum investment today for your retirement. How much would you need to deposit as a lump sum to accumulate the same amount determined in part b)? (2 marks)
d) If you hope to live for 20 years in retirement, how much can you withdraw every year in retirement so that after your last withdrawal the balance in your fund is zero? The first withdrawal is at the end of the first year after you retire. (2 marks)
e) You decide that in 30 years when you retire you will withdraw $100,000 per year, with the first withdrawal taking place at the end of the first year after you retire, how many annual withdrawals of $100,000 can be taken from the
fund? (2 marks)
f) Assume now that the most you can afford to save is $10,000 per year at the start of each year for the next 30 years, however when you retire you want to have accumulated $1,250,000 in your fund. What rate of return per annum (compound interest) do you need to earn on your investment? (2 marks)
g) Suggest three alternative investments that could be chosen (instead of investing in government bonds) that could offer the return needed in part f). (3 marks)
Question 2 10 marks
Project Evaluation
Whale Watchers Ltd owns and operates a fleet of boats that are used to take passengers on whale watching tours off the East coast of Nelson Bay in New South Wales. The company is currently considering replacing its “Millennium Catamaran”with the latest and greatest “Royale Catamaran” which would be their top of the line boat for whale watching. The Royale Catamaran can hold an extra 60 passengers,and the seating and facilities are of superior quality to the Millennium Catamaran.
Details of the existing Millennium Catamaran are as follows:
Remaining useful life is estimated at 5 years
Residual value now is estimated at $100,000
Residual value in 5 years is estimated at zero
The annual net cash flow is $80,000
The Royale Catamaran would cost the company AUD$1,250,000 and would be purchased from a US manufacturer.
Details of the new Royale Catamaran are as follows:
Estimated useful life 20 years
Residual value in 20 years is estimated at $120,000
The annual net cash flow is $170,000.
Other information is as follows:
Net cash flows are to be regarded as received at the end of each year.
The required rate of return is 11% per annum
Other replacement dates are not to be considered
Management is considering the following alternatives.
(1) Replace the Millennium Catamaran with the Royale Catamaran now
(2) Replace the Millennium Catamaran with the Royale Catamaran in 5
years time
Required:
a) Advise management as to which alternative it should adopt and explain why.(5 marks)
b) Explain three non-financial factors that management should also consider when deciding whether to replace the Millennium Catamaran with the Royale
Catamaran. (3 marks)
c) Briefly explain the 2 methods that can be used to evaluate mutually exclusive investments with different lives. Which method is most often used and why?
(2 marks)
Question 3 16 marks
Security Valuation
Wannabe Ltd is a large blue chip Australian company who first listed on the ASX in1989. The company has since diversified, and has made several takeovers in the last five years. The company needs to raise $10,000,000 to finance a business
acquisition that they have planned for the near future.
The company has sought advice from their financial team, and have been advised that they can either raise the required funds through an issue of bonds, or they can issue ordinary shares to raise the required funds.
Bond Issue
If the company decides to proceed with a bond issue, they will issue 10 year $1,000 bonds paying interest at a rate of 7.0% per annum half yearly. The company has summarised the yields on 10 year bonds with the corresponding ratings in the table provided below.
Rating B BB BBB A AA
Yield to maturity (%p.a., compounding half yearly)
8.10 7.70 7.00 6.50 6.00
For the proposed bond issue:
a) If the bonds are rated AA, determine the issue price per $1,000 bond (correct to the nearest cent). (2 marks)
b) If the bond price is at par, what rating must have been given to the bonds issued? Explain. [You do not need to show any calculations for this part.]
(2 marks)
c) If the bond rating was downgraded from AA to A, what will happen to the price of the bond? Explain.http://www.ukassignment.org/azdxassignment/ [You do not need to show any calculations for this part.] (2 marks)
d) Even if a bond has no risk of default, for example an Australian government issued bond, is your investment completely “risk free”? Explain.(2 marks)
Ordinary Share Issue
The alternative for Wannabe Ltd is to make a new issue of ordinary shares to the public to raise $10,000,000.Wannabe Ltd expects to pay a dividend of $5.00 per ordinary share next year. This dividend will increase at 10% for 3 years after next year, and then the growth rate will drop to 5% per year indefinitely.
The required rate of return on ordinary shares is currently 12% per annum. For the proposed ordinary share issue:
e) Determine the price today (P0) of one ordinary share in Wannabe Ltd (correct to the nearest cent). (3 marks)
f) Would you expect the company to make the new issue at a discount, at a premium or at the current market price? Explain. (2 marks)
g) List and explain 3 factors that the company should consider when choosing between issuing debt and issuing equity securities. (3 marks)
END OF ASSIGNMENT
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