# Assignment of Finance

Assignment Requirements

Your total assignment submission should not exceed five (5) A4 pages, excluding a reference list, with roughly 2 pages for Question 1 and 3 pages for Question 2.
Question 1: Time Value of Money and Bonds (10 marks total)
(a) According to an ANZ survey of Adult Financial Literacy in Australia, 73% of us have not made an estimate of how much money we will need each year in retirement.1 Without knowing this, it is difficult to develop and implement a realistic plan that will meet our retirement goals.
Working out how much we will need depends on many personal factors but some general estimates are available as a starting point. The Association of Superannuation Funds of Australia (ASFA) produces a Retirement Standard2 that gives budget breakdowns for ‘modest’ and ‘comfortable’ retirement lifestyles for singles and couples that assume retirees own their home. A single retiree wanting a comfortable lifestyle needs \$42,597 per year.
Your friend, Alice, has heard you are studying finance and has asked your advice on how much money she will need to put into superannuation every year between now and retirement. Alice is a 30 year old female, who would like to retire in 35 years and wants to make her retirement plans based on remaining single and having a ‘comfortable’ retirement lifestyle. Alice currently has no superannuation and expects to own her home before retirement.
Using the Australian Life Tables 2010-12 produced by the Australian Government Actuary3, you have found that Australian females have a longer life expectancy than males and the average 30 year old female is predicted to live to be about 85. You estimate that the long-term average annual inflation rate will be 4%. You also estimate that the expected average annual rate of return on Alice’s superannuation investment prior to retirement will be 12% but after retirement, when she shifts the weighting of her superannuation investments much more towards cash and other less risky asset classes, the average annual rate of return is expected to be 6%. (Round to the nearest dollar in the calculations below and ignore taxes.)
i) How much will the ASFA comfortable annual retirement income be at the time Alice retires? (Assume it will rise at the same rate as average inflation.) (0.5 marks) ii) What lump sum will Alice need in superannuation at retirement to receive the annual income (in nominal terms) calculated in part i)? (Assume an ordinary annuity.) (0.5 marks) iii) What amount will Alice need to put into superannuation at the end of each year until retirement in order to have the lump-sum calculated in ii)? (0.5 marks)
1 ANZ 2011, Adult Financial Literacy in Australia, December, available at http://www.anz.com/aboutus/corporate-responsibility/cr-library/, accessed December 2014. 2 Available at http://www.superannuation.asn.au/resources/retirement-standard. Updated quarterly with the September 2014 quarter being the quoted and most recent figures at the time of writing. 3 Available at http://www.aga.gov.au/publications/life_table_2010-12/default.asp.
A1, ACC00716 S1 2015
Page 2 of 4
iv) Now assume that Alice is 50, not 30, and has been working full-time for 20 years. She has lived a great lifestyle until now, spending all her disposal income after paying down a mortgage on her home. Recalculate iii) above assuming the same retirement income and lump-sum as calculated in parts i) and ii) but now 15 years to retirement. (0.5 marks) v) Comment on the difference in your results at part iii) and iv). (0.5 marks)
(b) Compounding is not restricted to money values – it can be applied to growth rates in many business and economic values. In business jargon, it is often called the compound annual growth rate or CAGR. This is the same as a compounding interest rate.
The International Air Transport Association predicts that, in 2017, 487.9 million passengers will fly domestic routes in China, the second largest number in the world behind the U.S. This prediction represents a 10.2% CAGR on 2012 passenger numbers.4
i) If this growth rate can be expected to continue beyond 2017, what is your prediction for the number of passengers flying domestic routes in China in 2020? (0.5 marks) ii) What is the CAGR for a Chinese domestic airline that carried 20 million passengers in 2012 and 28 million passengers in 2014? If this CAGR is expected to continue, what market share do you predict for the airline in 2020? (1 mark)
(c) On 1 July 2014 you borrow \$350,000 to buy an investment property at Coolangatta. The rate on the loan is fixed for the first 5 years at 5.49% and the loan requires monthly payments, due on the last day of the month, over a 30 year term.
i) What is the effective annual rate on your loan? (0.5 marks) ii) Assume you can claim the interest on this loan as a tax deduction against the rental income you receive from the property. How much interest will you be able to claim as an annual tax deduction in the first financial year (1 July 2014 to 30 June 2015) and in the fifth financial year? (2 marks)
(d) In December 2014, Moody’s Chief Economist John Lonski said in reference to US high-yield bonds (which in this context are rated Ba or lower by Moody’s):
…the recent high-yield bond spread of 554 bp is too wide by … 60 bp. Given the positive outlook for business activity, high-yield bonds are now attractively priced.5
i) Explain which component(s) of market interest rates account for high-yield bonds having such large spreads over the yield on a Treasury bond of equivalent maturity and why a ‘positive outlook for business activity’ would have an impact on those spreads. (1.5 marks) ii) What would happen to the prices of high yield bonds if Lonski’s prediction is correct? Illustrate your answer with a numerical example for a high-yield bond with 10 years to maturity and 8% semi-annual coupon payments. Assume a 10 year Treasury bond yields 2.14% p.a. (2 marks)
4 International Air Transport Association 2013, ‘Airlines expect 31% rise in passenger demand by 2017’, 10 December, available at www.iata.org/pressroom/pr/pages/2013-12-10-01.aspx, accessed 20 February 2015. 5 Lonski, J. 2014, ‘Credit Markets Review and Outlook: Foreign deflation risks menace 2015’s benign outlook for corporate credit’, Weekly Market Outlook, Moody’s Analytics, 18 December, p. 3.
A1, ACC00716 S1 2015
Page 3 of 4
Question 2: Company analysis, risk and returns (15 marks total)
You will be allocated an ASX listed company to study for this part of the assignment and part of Assignment 2. You can find your allocated company in ‘View Grades’ on the unit site.
Your task is to analyse the company with a view to understanding its financial performance and, with the benefit of hindsight, determining whether or not the recommendation to buy was a good one in the short-term.
Your analysis should cover the following:
(a) Evaluate Statement of Cash Flows data for financial years ending 30 June 2013 and 30 June 2014. Do not include the statement of cash flows in your assignment answer. Evaluate the data, rather than just repeating it. (1.5 marks)
(b) Evaluate the company’s free cash flow and return on invested capital for the 2013 and 2014 financial years ending 30 June. Assume that the company’s cost of capital (WACC) is the same as the expected rate of return (cost of equity) you calculate in part (d) iii) below.7 (1.5 marks).
(c) Provide a summary ratio analysis (5 marks).
Start your ratio analysis with an (extended) DuPont analysis based on the financial years ending 30 June 2013 and 2014. Doing the analysis for two years will give you a comparison over time. The DuPont model allows us to decompose return on equity, an important overall indicator of firm performance, into its three drivers: expense control, asset utilisation and debt utilisation. The DuPont model provides a very useful starting point in analysing a company’s financials because it provides structure to initial analysis. This saves time and helps avoid the potential confusion that can occur when faced with an overwhelming number of ratios. With DuPont analysis, you see the big picture first and then focus your attention on areas of strength and weakness.
A1, ACC00716 S1 2015
Page 4 of 4
Use a table to present the figures and then evaluate these with a view to teasing out the strengths and weaknesses of the company by explaining changes in return on equity (or, if no change has occurred, how the return on equity has been achieved). Further judicious ratio analysis to add depth to your analysis is appropriate but you should demonstrate that this extra analysis logically flows from your initial analysis. Simply calculating and discussing all possible ratios without any clear justification is not the purpose of this exercise and will be viewed negatively by your marker. Instead, be concise, logical and purposeful. Interpret the figures with the context of the company in mind and draw on your findings in parts (a) and (b) if relevant. Do the analysis first, consider it carefully, jot down the important conclusions and then write it up. Limit the summary (including table) to one A4 page.
(d) Analyse the market returns for the company’s shares from the end of their financial year The following gives you a step-by-step guide to doing this analysis:
i) Calculate the monthly percentage returns for the company’s shares during the period. (To keep it simple, ignore dividends for this analysis and use adjusted monthly closing prices.) Then calculate the average monthly percentage return and standard deviation of returns and, using the procedure described in your text, annualise the returns and standard deviation. (Assume that the shares are held for the entire period so that no capital gain is realised during the period and consequently there is no reinvestment and compounding.) (2.5 marks) ii) Repeat the process in i) for the same period but this time for the market as a whole, using the All Ordinaries price index as a proxy. (0.5 marks) iii) Calculate the expected return on the company’s shares at the end of their 2014 financial year. To do this, use the yield to maturity on that date of a 10-year Australian Treasury bond as a proxy for the risk-free rate, assume the market risk premium is 6.4% and use the company’s current beta (thus assuming it has not changed since the financial year end). (1.5 mark) iv) Using the figures you have calculated, evaluate the risk and return of the company in comparison with the market actuals and the expected return. (2.5 marks)
In writing up part (d) of the assignment, as in part c above, use a table to present the figures .
Note :For question 2 please use the link mentioned below(https://login.ezproxy.scu.edu.au/login?qurl=http%3a%2f%2fwww.aspecthuntley.com.au%2faf%2ffinhome%3fxtm-licensee%3dfinanalysis) which will ask for username and password .The username is sdhami10 and password is 08101990 when you will go inside that link put company code on search bar on right hand side ( cod eis SFH) Specialty Fashion Group Limited. We need to complete question no 2 by reviewing this company information

Order Now
https://thecustomwritings.com/order/
YOU CAN ALSO PLACE OTHER SIMILAR ORDERS ON OUR WEBSITE AND GET AMAZING DISCOUNTS!!!

# Our Service Charter

1. ### Excellent Quality / 100% Plagiarism-Free

We employ a number of measures to ensure top quality essays. The papers go through a system of quality control prior to delivery. We run plagiarism checks on each paper to ensure that they will be 100% plagiarism-free. So, only clean copies hit customers’ emails. We also never resell the papers completed by our writers. So, once it is checked using a plagiarism checker, the paper will be unique. Speaking of the academic writing standards, we will stick to the assignment brief given by the customer and assign the perfect writer. By saying “the perfect writer” we mean the one having an academic degree in the customer’s study field and positive feedback from other customers.
2. ### Free Revisions

We keep the quality bar of all papers high. But in case you need some extra brilliance to the paper, here’s what to do. First of all, you can choose a top writer. It means that we will assign an expert with a degree in your subject. And secondly, you can rely on our editing services. Our editors will revise your papers, checking whether or not they comply with high standards of academic writing. In addition, editing entails adjusting content if it’s off the topic, adding more sources, refining the language style, and making sure the referencing style is followed.
3. ### Confidentiality / 100% No Disclosure

We make sure that clients’ personal data remains confidential and is not exploited for any purposes beyond those related to our services. We only ask you to provide us with the information that is required to produce the paper according to your writing needs. Please note that the payment info is protected as well. Feel free to refer to the support team for more information about our payment methods. The fact that you used our service is kept secret due to the advanced security standards. So, you can be sure that no one will find out that you got a paper from our writing service.
4. ### Money Back Guarantee

If the writer doesn’t address all the questions on your assignment brief or the delivered paper appears to be off the topic, you can ask for a refund. Or, if it is applicable, you can opt in for free revision within 14-30 days, depending on your paper’s length. The revision or refund request should be sent within 14 days after delivery. The customer gets 100% money-back in case they haven't downloaded the paper. All approved refunds will be returned to the customer’s credit card or Bonus Balance in a form of store credit. Take a note that we will send an extra compensation if the customers goes with a store credit.

We have a support team working 24/7 ready to give your issue concerning the order their immediate attention. If you have any questions about the ordering process, communication with the writer, payment options, feel free to join live chat. Be sure to get a fast response. They can also give you the exact price quote, taking into account the timing, desired academic level of the paper, and the number of pages.

Excellent Quality
Zero Plagiarism
Expert Writers

or

## Instant Quote

 Subject: Please Select... Art   Architecture   Dance   Design Analysis   Drama   Movies   Music   Paintings   Theatre Biology Business Chemistry Communications and Media   Advertising   Communication Strategies   Journalism   Public Relations Creative writing Economics   Accounting   Case Study   Company Analysis   E-Commerce   Finance   Investment   Logistics   Trade Education   Application Essay   Education Theories   Pedagogy   Teacher's Career Engineering English Ethics History   African-American Studies   American History   Asian Studies   Canadian Studies   East European Studies   Holocaust   Latin-American Studies   Native-American Studies   West European Studies Law   Criminology   Legal Issues Linguistics Literature   American Literature   Antique Literature   Asian Literature   English Literature   Shakespeare Studies Management Marketing Mathematics Medicine and Health   Alternative Medicine   Healthcare   Nursing   Nutrition   Pharmacology   Sport Nature   Agricultural Studies   Anthropology   Astronomy   Environmental Issues   Geography   Geology Philosophy Physics Political Science Psychology Religion and Theology Sociology Technology   Aeronautics   Aviation   Computer Science   Internet   IT Management   Web Design Tourism Type: Please Select... Essay Term Paper Research Paper Coursework Book Report Book Review Movie Review Dissertation Thesis Thesis Proposal Research Proposal Dissertation Chapter - Abstract Dissertation Chapter - Introduction Chapter Dissertation Chapter - Literature Review Dissertation Chapter - Methodology Dissertation Chapter - Results Dissertation Chapter - Discussion Dissertation Services - Editing Dissertation Services - Proofreading Formatting Admission Services - Admission Essay Admission Services - Scholarship Essay Admission Services - Personal Statement Admission Services - Editing Editing Proofreading Case Study Lab Report Speech Presentation Math Problem Article Article Critique Annotated Bibliography Reaction Paper PowerPoint Presentation Statistics Project Multiple Choice Questions (None-Time-Framed) Other (Not listed) Pages/Words: 1 page/approx 275 words 2 pages/approx 550 words 3 pages/approx 825 words 4 pages/approx 1100 words 5 pages/approx 1375 words 6 pages/approx 1650 words 7 pages/approx 1925 words 8 pages/approx 2200 words 9 pages/approx 2475 words 10 pages/approx 2750 words 11 pages/approx 3025 words 12 pages/approx 3300 words 13 pages/approx 3575 words 14 pages/approx 3850 words 15 pages/approx 4125 words 16 pages/approx 4400 words 17 pages/approx 4675 words 18 pages/approx 4950 words 19 pages/approx 5225 words 20 pages/approx 5500 words 21 pages/approx 5775 words 22 pages/approx 6050 words 23 pages/approx 6325 words 24 pages/approx 6600 words 25 pages/approx 6875 words 26 pages/approx 7150 words 27 pages/approx 7425 words 28 pages/approx 7700 words 29 pages/approx 7975 words 30 pages/approx 8250 words 31 pages/approx 8525 words 32 pages/approx 8800 words 33 pages/approx 9075 words 34 pages/approx 9350 words 35 pages/approx 9625 words 36 pages/approx 9900 words 37 pages/approx 10175 words 38 pages/approx 10450 words 39 pages/approx 10725 words 40 pages/approx 11000 words 41 pages/approx 11275 words 42 pages/approx 11550 words 43 pages/approx 11825 words 44 pages/approx 12100 words 45 pages/approx 12375 words 46 pages/approx 12650 words 47 pages/approx 12925 words 48 pages/approx 13200 words 49 pages/approx 13475 words 50 pages/approx 13750 words 51 pages/approx 14025 words 52 pages/approx 14300 words 53 pages/approx 14575 words 54 pages/approx 14850 words 55 pages/approx 15125 words 56 pages/approx 15400 words 57 pages/approx 15675 words 58 pages/approx 15950 words 59 pages/approx 16225 words 60 pages/approx 16500 words 61 pages/approx 16775 words 62 pages/approx 17050 words 63 pages/approx 17325 words 64 pages/approx 17600 words 65 pages/approx 17875 words 66 pages/approx 18150 words 67 pages/approx 18425 words 68 pages/approx 18700 words 69 pages/approx 18975 words 70 pages/approx 19250 words 71 pages/approx 19525 words 72 pages/approx 19800 words 73 pages/approx 20075 words 74 pages/approx 20350 words 75 pages/approx 20625 words 76 pages/approx 20900 words 77 pages/approx 21175 words 78 pages/approx 21450 words 79 pages/approx 21725 words 80 pages/approx 22000 words 81 pages/approx 22275 words 82 pages/approx 22550 words 83 pages/approx 22825 words 84 pages/approx 23100 words 85 pages/approx 23375 words 86 pages/approx 23650 words 87 pages/approx 23925 words 88 pages/approx 24200 words 89 pages/approx 24475 words 90 pages/approx 24750 words 91 pages/approx 25025 words 92 pages/approx 25300 words 93 pages/approx 25575 words 94 pages/approx 25850 words 95 pages/approx 26125 words 96 pages/approx 26400 words 97 pages/approx 26675 words 98 pages/approx 26950 words 99 pages/approx 27225 words 100 pages/approx 27500 words 101 pages/approx 27775 words 102 pages/approx 28050 words 103 pages/approx 28325 words 104 pages/approx 28600 words 105 pages/approx 28875 words 106 pages/approx 29150 words 107 pages/approx 29425 words 108 pages/approx 29700 words 109 pages/approx 29975 words 110 pages/approx 30250 words 111 pages/approx 30525 words 112 pages/approx 30800 words 113 pages/approx 31075 words 114 pages/approx 31350 words 115 pages/approx 31625 words 116 pages/approx 31900 words 117 pages/approx 32175 words 118 pages/approx 32450 words 119 pages/approx 32725 words 120 pages/approx 33000 words 121 pages/approx 33275 words 122 pages/approx 33550 words 123 pages/approx 33825 words 124 pages/approx 34100 words 125 pages/approx 34375 words 126 pages/approx 34650 words 127 pages/approx 34925 words 128 pages/approx 35200 words 129 pages/approx 35475 words 130 pages/approx 35750 words 131 pages/approx 36025 words 132 pages/approx 36300 words 133 pages/approx 36575 words 134 pages/approx 36850 words 135 pages/approx 37125 words 136 pages/approx 37400 words 137 pages/approx 37675 words 138 pages/approx 37950 words 139 pages/approx 38225 words 140 pages/approx 38500 words 141 pages/approx 38775 words 142 pages/approx 39050 words 143 pages/approx 39325 words 144 pages/approx 39600 words 145 pages/approx 39875 words 146 pages/approx 40150 words 147 pages/approx 40425 words 148 pages/approx 40700 words 149 pages/approx 40975 words 150 pages/approx 41250 words 151 pages/approx 41525 words 152 pages/approx 41800 words 153 pages/approx 42075 words 154 pages/approx 42350 words 155 pages/approx 42625 words 156 pages/approx 42900 words 157 pages/approx 43175 words 158 pages/approx 43450 words 159 pages/approx 43725 words 160 pages/approx 44000 words 161 pages/approx 44275 words 162 pages/approx 44550 words 163 pages/approx 44825 words 164 pages/approx 45100 words 165 pages/approx 45375 words 166 pages/approx 45650 words 167 pages/approx 45925 words 168 pages/approx 46200 words 169 pages/approx 46475 words 170 pages/approx 46750 words 171 pages/approx 47025 words 172 pages/approx 47300 words 173 pages/approx 47575 words 174 pages/approx 47850 words 175 pages/approx 48125 words 176 pages/approx 48400 words 177 pages/approx 48675 words 178 pages/approx 48950 words 179 pages/approx 49225 words 180 pages/approx 49500 words 181 pages/approx 49775 words 182 pages/approx 50050 words 183 pages/approx 50325 words 184 pages/approx 50600 words 185 pages/approx 50875 words 186 pages/approx 51150 words 187 pages/approx 51425 words 188 pages/approx 51700 words 189 pages/approx 51975 words 190 pages/approx 52250 words 191 pages/approx 52525 words 192 pages/approx 52800 words 193 pages/approx 53075 words 194 pages/approx 53350 words 195 pages/approx 53625 words 196 pages/approx 53900 words 197 pages/approx 54175 words 198 pages/approx 54450 words 199 pages/approx 54725 words 200 pages/approx 55000 words Single spaced approx 275 words per page Urgency (Less urgent, less costly): Please Select... 6 hours 12 hours 24 hours 48 hours 3 days 4 days 5 days 7 days 10 days 20 days 30 days Level: Choose High School Undergraduate Master Ph. D. Currency: USD GBP CAD AUD EUR Total Cost: NaN

Get 10% Off on your 1st order!