Unit Overview

This unit focuses on aspects of the corporate finance theories and tools and techniques to facilitate financial decision making. It aims to expose students to and familiarise them with corporate sector financial management by examining the main issues faced by financial managers of public companies. Topics covered are: Information asymmetry and signalling, agency theory, capital markets and sources of funds, capital budgeting under uncertainty, capital structure, dividend policy, and market for corporate control and corporate governance.

The aim of these assessments is to assist you to:

- gain a deeper understanding of corporate finance concepts;
- appreciate current issues discussed/faced in the industry; and
- apply your knowledge to investigate real companies.

Through these exercises, you will gain a better understanding of how corporate finance concepts can be applied in the real world.

This is an excellent opportunity for those who wish to pursue a career as a financial officer/manager.

For those who are taking this unit as an elective, it provides the basic foundation and tools needed to investigate the financial health of a company and assist in the decision to purchase its shares for investment.

The textbook for this unit is Brealey, R., Myers, S. & Allen, F. 2016, Principles of Corporate Finance, 12th ed, New York: McGraw-Hill. The textbook is essential as it covers all the necessary concepts of this unit. You may purchase and use the older (or other) editions version; however, the chapters will not be in sync and there may be differences in the after chapter questions.

Delivery of Unit Content

With the assistance of Curtin's Office of Assessment, Teaching and Learning, the delivery of the unit's content has been altered to facilitate discussion and promote participation.

1.11 Blackboard navigation

On Blackboard, the unit's content is delivered via learning modules. There are eleven modules covering the content for this unit. Each module is further divided into three segments; pre-workshop, workshop and post-workshop

The learning outcomes are presented at the start of each learning module. Please take time to review these learning outcomes as they will give you an idea of what to focus on when you are reviewing the chapter content.

Pre-workshop

In this segment, you will find the iLecture recording (when available), presentation slides and reference materials (module files). There are also activity tasks, which will guide you as you are reading the relevant chapters in the textbook. The activity tasks are repeated in Appendix A of this assessment booklet.

Please note that reading the relevant chapters in the textbook is crucial in the mastery of the concepts. iLectures and the presentation slide merely serve as an overview introduction to the subject matter. They are not to be treated as chapter summaries.

The reference materials in each module are not directly examinable. However, they do provide additional explanation and would aid your understanding in specific concepts discussed in the module. Although we do encourage all students to review the reference materials, you are not required to print them out or bring them to the examination.

Workshop

This segment represents the hands-on part of the module. It will contain tutorial questions and case studies for you to apply the concepts that you have reviewed. Answers are provided to assist you in your learning. When there are no answers provided for the case studies, you are to discuss your thoughts with the tutor/facilitator.

Post-workshop

You will be presented with a thought provoking question each week. You are encouraged to discuss this with your tutor/facilitator. Although these questions are not directly examinable, they will help you understand how the concepts learnt are applied in the real life.

For the final part of your learning process, short multiple choice questions are available for you to test your understanding. These questions will also give you the needed practice to prepare you for the exams.

1.12 Lecture/workshop

If the mode of study includes lectures/workshops, you are expected to have read the relevant chapters for the week prior to attending. The lectures/workshops will be interactive and your participation of the activities in the lectures is expected.

It is not the intention/goal of the lectures to provide a full summary of the chapter. The purpose is to present the main concepts in way that allows you to gain a better perspective and understanding of the key themes. You are encouraged to engage with the lecturer and clarify when in doubt. You may also have guest lecturers from the industry to present you with industry case studies.

Here are what students have said about the delivery of the unit content:

Communication

If you have any queries, please try to approach your tutor first, lecturer second and unit coordinator last.

Exam information

All exam information will be provided on the first page of the mock exam paper which would be made available to you on Blackboard.

Additional help may be provided through your lecturer/facilitator on the last lecture/workshop.

You may bring in any non-electronic reference material, which includes but not restricted to:
- Textbooks
- Printed lecture slide and tutorial questions
- Hand written/typed notes
- Hand written/typed chapter summaries and formula sheets You may also write or use post-it notes in your textbook.
Reading the textbook and practicing the questions at the back of the book is essential to passing the exams. Majority of the questions in the exams are adapted from the publishers of the textbook.

Reading lectures/doing tutorials alone is not sufficient.

Practicing the mock exam paper (without looking at the answers) on Blackboard will give you an indication of what to expect in the exams

No individual requests for exam tips would be entertained;

Details of supplementary and deferred exams (including the release of results) are provided by central administration. Your unit coordinator will not have any information of the dates.

Supplementary exams are awarded by the Board of Examiners. Your unit coordinator is not involved in the process.

2.0 Assessment Overview

There are two ongoing assessments in this unit. This first is a case study. This assessment is structured in a way that is directly relevant your future work in the industry and authentic by using real company information.

The second assignment is a literature review which will allow you to explore the selected corporate finance concept in detail and appreciate the various view expressed.

Both these assignments are time consuming and you have to follow the recommended start times in order for you to obtain a good score.

Assessment information - Case study (20%)
Objective: To prepare an analyst report on a public listed dividend paying company. Skills acquired:
- discipline knowledge;
- thinking skills;
- learning how to learn

Specifically, conduct research on a company and report on key areas of shareholder analysis, risk-return analysis and cost of capital.

Submission instructions

This assignment is due on Monday of week 6 (5 Sep) at 5pm.

It would be in a group of no more than 2 students. It is your responsibility to find a partner to work with; although your tutor will facilitate this is your tutorial class. Please submit the names of the members in your group to your tutor by week 2. If you are unable to find a partner by week 3, you will have to complete this assignment on your own. Please ensure that all members' names are clearly stated on the front page of your assignment and filename of your document.

Please allow at least 3 weeks to complete this assignment. You will have to commence your case study assignment from week 3 (15 Aug).

The presentation of the case study should be in 1.5 lines spacing and 12pt font. It should not be more than 4,000 in words. The word count excludes tables, diagrams, charts, footnotes and references.

Your document must be typed and submitted through Turnitin on the Blackboard by the due date. No email copies will be accepted.

Your submission on Turnitin must be done using the following document FILENAME format:
, , , , CS. This refers to the actual document that you are working on, not the Turnitin submission title. Assessments without this filename format will automatically receive a 2 marks penalty.

Case study details

You are to select a public listed dividend paying company from the country of your study location (e.g. Australia for the Bentley campus) and conduct a detailed analysis on it. You may not select Dominos as this is the company that will be used in the lecture.

The purpose of this assignment is to use your acquired knowledge from this unit to investigate the financial strength of a public listed company. Your research should cover the areas of:

- shareholder analysis;
- risk-return analysis; and
- cost of capital.

In each of the areas, you are to report your findings using the questions provided below as a guide. If the information is not from the company's annual report, you will have to provide details on

1. where you sourced the information; and

2. comment on how you have verified its reliability.

The report must be written completely by you. You are not to purchase or reproduce commercial stock reports.

Shareholder analysis (20%)

- Who are the typical investors in this stock?

- Who are the marginal investors in this stock?

Risk-return analysis (40%)

- What are the risks of this company? (Where is this risk coming from (market, firm, industry or currency)? How is the risk profile of the company changing?

- What return would you have earned investing in this company's stock?

- How much would you have under or out-performed the market in the short term?

- In your view, how much of the performance can be attributed to management?

Cost of capital (40%)

- Calculate the company's cost of equity using various methods (at least 2); showing your calculations and detailing the source of your data.

- Calculate the company's cost of debt; showing your calculations and detailing your assumptions and the source of your data.

- Calculate the company cost of capital; showing your calculations.

Additional guidelines

- You are preparing an analyst report for a client. Do not merely answers the questions in the case study.

- It should be written professionally in sentences and paragraphs; not in bullet point form.

- The questions 3.21 - 3.23 serve as a guide and are not to be repeated in your report.

- Where possible, calculations must be shown and assumptions must be clearly stated. Use of an appendix is recommended; however, there must be clear reference made to the main body.

- Where possible, use figures from the annual report; this is the most accurate source of information. For example, some websites may give you the ROE of the company, however, if you do not show your workings, you will not be awarded the marks for it.

- It is preferable that you reference your work using footnotes. This will help the marker to identify your source without referring to the back of your report. Please refer to the following document for additional help on footnotes:

- Choose an Australian company listed on the stock exchange.

- Download the annual report from www.asx.com.au or the company's website. Please use the latest available annual report. If the latest annual report is not available for the company, please select another company. Figures from last year's annual report will not be accepted.

- Read the summary of the business.

o What type of investor would invest in this company?

- Read the chairman's/director's message to the shareholders.

o To whom is the message directed towards?

- Locate the top 20 shareholdings table in the annual report.

o Identify who the major shareholders are.

o What do you think is their motivation for investing in the company?

o What type of activity do you expect from the majority of the shareholders that you have identified?

- From the above exercise, you would now be able to describe the profile of the marginal investor in this stock and ascertain the impact of their activities on the company's long term share price.

Risk-return analysis guide

- Read the risk disclosure section in the annual report.

o Summarise where the risks are coming from.

o From your understanding of the business describe the top three risks that investors should be mindful of and how will these risks will change in the future.

- The total return to the shareholder is the capital growth plus the dividend received.

o Use the ASX website, Yahoo Finance or other research sites to determine the one year change in share price of the stock. Use the closing price.

o Use the ASX website or annual report to determine the dividend paid for the year. If the share is franked, you will have to gross it up to account for franking credits. If the stock pays dividends in foreign currency, you will have to convert that home currency using the exchange rate of the date of dividend payment.

o Most Australian companies pay twice a year: interim and final dividend.

o Some companies may pay a special dividend. This should be included in calculating your total one year return.

o The dates used should match the dates of the annual report.

o DO NOT select a company that does not pay dividends.

- You can use the All Ordinaries (AORD) as a proxy for the market. Make sure the date selected for your start and end date correspond to the one you used to calculate your return for the stock.

- Review the summary of projects undertaken by the company in the annual report. Identify if there is a link to the under or over-performance of the stock relative to the benchmark due to capital investments/projects. How successful are the finance managers of the company in selecting good investments? Assessment information - Literature Review (35%)

The purpose of this assignment is to critically reflect on corporate finance concepts/theories through the reviewing of existing literature.

Skills acquired:
- Apply discipline knowledge
- Thinking skills
- Information skills
- International perspective

Specifically, you are to write a literature review on Mergers and Acquisition. The structure that you should employ would be as follows:
- Abstract (200 words)
- Introduction (2 pages)
- Body (6 pages)
- Conclusion (2 pages)

Your assignment will not be marked and you will obtain a zero if you write on the topics of capital structure, dividend policy or corporate governance.

Attachment:- Corp Assignment.rar