Complete both parts of this assignment. You will work on some of these pieces earlier in the course when you submit the Module 3: Portfolio Milestone and the Module 5 Portfolio Milestone.
Part One: Ratio Analysis
Pick one debt ratio and one
profitability ratio, which you did not analyze, from the week three
portfolio milestone. Research a publicly traded technology company and
access the financial statements needed to calculate those two ratios.
Provide a cross-sectional analysis comparing the results from TechnoTCL (attached)
Download TechnoTCL and your chosen company for the two ratios.
Prepare a presentation (maximum of 4 slides – no speaker notes required) with the following information:
Slide One: Analyze the two ratios including how the ratio is calculated and how it is used.
Slide Two: Introduce the public company chosen, describe the
information used for the ratios and calculate the two selected ratios.
Slide Three: Show the two ratios for the two companies (your company and TechnoTCL) in a table.
Slide Four: Compare and contrast the key differences between the ratios for the two companies and what they might indicate.
Part Two: Require Return for Capital Funding
Suppose that TechnoTCL is considering a new project. They are trying
to determine the required rate of return for their debt and equity
holders. See the information below:
A 6.5% percent annual coupon bond with 15 years to maturity, selling
for 96% of par. The bonds make annual payments. What is the before tax
cost of debt? If the tax rate is 30%, what is the after-tax cost of
debt?
The firm’s beta is 1.5. The risk-free rate is 4.0% and the expected market return is 10%. What is the cost of equity using CAPM?
Use the balance sheet for TechnoTCL to determine the weighting for
capital used by the company. What are the weightings for long-term debt
and common equity?
Calculate the WACC for TechnoTCL.
If the company has three possible projects with the following
characteristics and has $300,000 available to fund capital investments,
what decision should be made for each project (A-C)? Why?
Submission Guidelines
Add to your existing presentation from Part One, create one slide
each for item above (numerical items 2-5). No speaker notes are
required.
Include a minimum of four (4) credible sources in addition to the public technology data source in APA format.
Submit the presentation as a PPT or PPTX file, and include a title slide and a reference slide.
Attach an Excel file if necessary, to support the calculations.
Also attached are the Module 3 and 5 submissions for referance.
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