The University of Sydney Business School Finance Discipline FINC 2011 Corporate Finance 1 Major Assignment Due Date: 4pm, Monday 27 May, 2013 ASX-listed Company Valuation Report This report requires you to undertake a valuation exercise on an Australian Security Exchange (ASX) listed company. You are required to use the models presented in the course to calculate a share price for the company and then make a recommendation to clients about whether they should invest in the selected company. Required: 1. Selected a publicly listed company on the ASX that has previously made dividend payments. 2. Calculate an expected perpetual growth rate for the company’s dividends. With reference to appropriate academic literature, justify your forecast. 3. Forecast the amount of the next dividend payment. 4. Using the CAPM model calculate an appropriate required rate of return for the shareholders of the company. With reference to appropriate academic literature, justify your value (Please note you are not required to calculate the beta yourself – you may use any reputable published number). 5. Determine the expected current share price using the constant dividend growth model. 6. On the basis of YOUR valuation what course of action would you recommend to your clients with respect to investing in this security? What caveats might you lace on this recommendation? Why? Formatting and Presentation: a. The assignment should be no more than 12 pages, with 1.5 line spacing and size 12 Times New Roman or Arial Font. Marks will be reduced by 10% for each page that the assignment exceeds 12 pages. Hence your mark will be reduced to zero if the assignment exceeds 22 pages. Brevity and conciseness are key ingredients of a highly successful report. You will be penalised for inappropriate formatting. b. Make sure you use proper referencing in your assignment. All essays must include a list of references in academic form using the author - date (Harvard) citation style. You will be penalised if you use inappropriate referencing. c. Pay particular attention to presentation. A significant component of your mark will be based on presentation. Avoid overdoing formatting, and ensure that the assignment is very clear, logical and professional. Pay attention to grammar. Clear and logical presentation is a major challenge in assignment preparation. Preparing a concise assignment is another major challenge. Every part of the assignment should somehow add to the end result otherwise it is superfluous and distracting. Page limit for assignment – 12 pages d. All data used in the assignment MUST be included in the appendix. You will be penalised to failure to include all data used. What’s included in the 12 page limit? - Executive summary - Assignment body - Tables - Diagrams What’s excluded from the 12 page limit? - Title page - References - Appendices CASE6CASE 6Student VersionCo ...

1. The University of Sydney Business School
Finance Discipline
FINC 2011
Corporate Finance 1
Major Assignment
Due Date: 4pm, Monday 27 May, 2013
ASX-listed Company Valuation Report
This report requires you to undertake a valuation exercise on an
Australian Security
Exchange (ASX) listed company. You are required to use the
models presented in
the course to calculate a share price for the company and then
make a
recommendation to clients about whether they should invest in
the selected
company.
Required:
1. Selected a publicly listed company on the ASX that has

2. previously made
dividend payments.
2. Calculate an expected perpetual growth rate for the
company’s dividends.
With reference to appropriate academic literature, justify your
forecast.
3. Forecast the amount of the next dividend payment.
4. Using the CAPM model calculate an appropriate required rate
of return for the
shareholders of the company. With reference to appropriate
academic
literature, justify your value (Please note you are not required
to calculate the
beta yourself – you may use any reputable published number).
5. Determine the expected current share price using the constant
dividend
growth model.
6. On the basis of YOUR valuation what course of action would
you recommend
to your clients with respect to investing in this security? What
caveats might
you lace on this recommendation? Why?
Formatting and Presentation:
a. The assignment should be no more than 12 pages, with 1.5
line spacing and
size 12 Times New Roman or Arial Font. Marks will be reduced

3. by 10% for
each page that the assignment exceeds 12 pages. Hence your
mark will be
reduced to zero if the assignment exceeds 22 pages. Brevity and
conciseness
are key ingredients of a highly successful report. You will be
penalised for
inappropriate formatting.
b. Make sure you use proper referencing in your assignment. All
essays must
include a list of references in academic form using the author -
date (Harvard)
citation style. You will be penalised if you use inappropriate
referencing.
c. Pay particular attention to presentation. A significant
component of your mark
will be based on presentation. Avoid overdoing formatting, and
ensure that the
assignment is very clear, logical and professional. Pay attention
to grammar.
Clear and logical presentation is a major challenge in
assignment preparation.
Preparing a concise assignment is another major challenge.
Every part of the
assignment should somehow add to the end result otherwise it is
superfluous
and distracting. Page limit for assignment – 12 pages
d. All data used in the assignment MUST be included in the
appendix. You will
be penalised to failure to include all data used.

4. What’s included in the 12 page limit?
- Executive summary
- Assignment body
- Tables
- Diagrams
What’s excluded from the 12 page limit?
- Title page
- References
- Appendices
CASE6CASE 6Student VersionCopyright 20108/24/09by
FACHECOLUMBIA MEMORIAL HOSPITALBreakeven
AnalysisThis case illustrates the use of breakeven analysis to
help make operating decisions. Note that the modelextends out
to Column AR.The model consists of a complete base case
analysis--no changes need to be made to the existingMODEL-
GENERATED DATA section. However, all relevant values in
the INPUT DATA section of the studentversion have been
replaced with zeros. Thus, students must determine the
appropriate input values andenter them into the model. These
cells are colored red. When this is done, any error cells will be
correctedand the base case solution will appear. Note that the
model does not contain any risk analyses, so studentswill have
to create their own if required by the case. Furthermore,
students must create their own graphics(charts) if needed to
supplement those included with this model.The instructor
version of the model contains three graph sheets. Figure 1 plots
total monthly revenue, totalmonthly costs, and total monthly
profit versus number of incremental visits without the new
marketing program.Figure 2 plots the same information with the
new marketing program, and Figure 3 contains the

5. incrementalmarketing program plot.INPUT DATA:Historical
Financial Data:Monthly AveragesCY 2009Jan 2010Feb
20102009Jan/Feb10CombinedNumber of
visits14,5221,3651,3351,2101,3501,230Net
revenue$548,747$55,028$54,748$45,729$54,888$47,037Salarie
s and
wages$154,250$13,540$13,544$12,854$13,542$12,952Physicia
ns fees192,00018,00018,00016,00018,00016,286Malpractice
insurance31,4403,2153,2152,6203,2152,705Travel and
education5,365538665447602469General
insurance8,112843843676843700Subscriptions1890016014Elect
ricity11,8201,1241,0299851,077998Water1,2601351421051391
10Equipment rental1,260105105105105105Building
lease155,74512,50012,50012,97912,50012,910Other operating
expenses103,7798,1527,9238,6488,0388,561Total operating
expenses$665,220$58,152$57,966$55,435$58,059$55,810Net
profit
(loss)($116,473)($3,124)($3,218)($9,706)($3,171)($8,773)Gros
s margin (%)-21.2%-5.7%-5.9%-21.2%-5.8%-18.7%Pro Forma
Average Month:Number of visits0Net revenue$0Salaries and
wages$0Physicians fees0Malpractice insurance0Travel and
education0General
insurance0Subscriptions0Electricity0Water0Equipment
rental0Building lease0Other operating expenses0Total operating
expenses$0Net profit (loss)$0Gross margin (%)0.0%Incremental
Monthly Costs:Number of Additional Visits per Day01-1011-
2021-3031-40Variable costs:Medical supplies$0.00per
visitAdministrative supplies0.00per visitTotal variable costs per
visit$0.00per visitSemifixed costs:Salaries and
wages$0$0$0$0Physician fees0000Total monthly semifixed
costs$0$0$0$0$0Fixed costs:Marketing assistant's
salary$0$0$0$0$0Advertising expenses00000Total monthly
fixed costs$0$0$0$0$0MODEL-GENERATED
DATA:Breakeven Analysis:Without New Marketing
Program:Maximum additional monthly
visits015030045060075090010501200Maximum additional daily

6. visits0510152025303540Incremental variable
costs$0$0$0$0$0$0$0$0$0Incremental semifixed
costs$0$0$0$0$0$0$0$0$0Total incremental monthly
costs$0$0$0$0$0$0$0$0$0Incremental
cost/visitNA$0.00$0.00$0.00$0.00$0.00$0.00$0.00$0.00Summa
ry Financial Statements:Number of Additional Visits per
Day0510152025303540Total monthly
visits01503004506007509001,0501,200Total daily
visits0510152025303540Net revenue per
visit$0.00$0.00$0.00$0.00$0.00$0.00$0.00$0.00$0.00Total net
monthly revenue$0$0$0$0$0$0$0$0$0Total current
costs$0$0$0$0$0$0$0$0$0Total incremental
costs000000000Current + incremental
costs$0$0$0$0$0$0$0$0$0Monthly profit
(loss)$0$0$0$0$0$0$0$0$0Gross margin
(%)0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%Graphics
Input:Number of Incremental Visits per
Day0123456789101112131415161718192021222324252627282
93031323334353637383940Total daily
visits454647484950515253545556575859606162636465666768
6970717273747576777879808182838485Total monthly
visits1,3501,3801,4101,4401,4701,5001,5301,5601,5901,6201,6
501,6801,7101,7401,7701,8001,8301,8601,8901,9201,9501,980
2,0102,0402,0702,1002,1302,1602,1902,2202,2502,2802,3102,3
402,3702,4002,4302,4602,4902,5202,550Total monthly
revenue$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Total current
costs$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Incremental variable
costs$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Incremental semifixed
costs00000000000000000000000000000000000000000Incremen
tal fixed
costs00000000000000000000000000000000000000000Total
incremental
costs$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0

7. $0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Graphical
recap:Incremental
visits012345678910111213141516171819202122232425262728
293031323334353637383940Total monthly
revenue$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Total monthly
costs$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Monthly profit
(loss)$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0With New Marketing
Program:Maximum additional monthly
visits015030045060075090010501200Maximum additional daily
visits0510152025303540Incremental variable
costs$0$0$0$0$0$0$0$0$0Incremental semifixed
costs$0$0$0$0$0$0$0$0$0Incremental fixed
costs$0$0$0$0$0$0$0$0$0Total incremental monthly
costs$0$0$0$0$0$0$0$0$0Incremental
cost/visitNA$0$0$0$0$0$0$0$0Summary Financial
Statements:Number of Additional Visits per
Day0510152025303540Total monthly
visits01503004506007509001,0501,200Total daily
visits0510152025303540Net revenue per
visit$0.00$0.00$0.00$0.00$0.00$0.00$0.00$0.00$0.00Total net
monthly revenue$0$0$0$0$0$0$0$0$0Total current
costs$0$0$0$0$0$0$0$0$0Total incremental
costs000000000Current + incremental
costs$0$0$0$0$0$0$0$0$0Monthly profit
(loss)$0$0$0$0$0$0$0$0$0Gross margin
(%)0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%Graphics
Input:Number of Incremental Visits per
Day0123456789101112131415161718192021222324252627282
93031323334353637383940Total daily
visits454647484950515253545556575859606162636465666768
6970717273747576777879808182838485Total monthly
visits1,3501,3801,4101,4401,4701,5001,5301,5601,5901,6201,6
501,6801,7101,7401,7701,8001,8301,8601,8901,9201,9501,980

8. 2,0102,0402,0702,1002,1302,1602,1902,2202,2502,2802,3102,3
402,3702,4002,4302,4602,4902,5202,550Total monthly
revenue$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Total current
costs$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Incremental variable
costs$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$00000000000000000000
0000000000000000000000Incremental fixed
costs00000000000000000000000000000000000000000Total
incremental
costs$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Graphical
recap:Incremental
visits012345678910111213141516171819202122232425262728
293031323334353637383940Total monthly
revenue$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Total monthly
costs$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Monthly profit
(loss)$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Expanded Marketing
Program Incremental Analysis:Added daily
visits012345678910111213141516171819202122232425262728
293031323334353637383940Incremental monthly
rev$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0Incremental monthly
costs00000000000000000000000000000000000000000Incr
monthly profit
(loss)$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0
$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0END
&A
Page &P
To complete this input, choose the historical values from above
that represent the best estimates for the average month for the
entire coming year.

9. Figure
10000111122223333444455556666777788889999101010101111
11111212121213131313141414141515151516161616171717171
81818181919191920202020212121212222222223232323242424
24252525252626262627272727282828282929292930303030313
13131323232323333333334343434353535353636363637373737
383838383939393940404040
Total Monthly Revenue
Total Monthly Costs
Total Monthly Profit
Figure 1
Breakeven without New Marketing Program
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

10. 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
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0
0
0
0
0
0
0
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11. 0
0
0
0
0
0
0
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0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
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0
0
0
0
0
0
0
0
0

12. 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Figure
20000111122223333444455556666777788889999101010101111
11111212121213131313141414141515151516161616171717171
81818181919191920202020212121212222222223232323242424
24252525252626262627272727282828282929292930303030313
13131323232323333333334343434353535353636363637373737
383838383939393940404040
Total Monthly Revenue
Total Monthly Costs

13. Total Monthly Profit
Figure 2
Breakeven with New Marketing Program
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
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0
0
0
0
0
0
0
0
0

14. 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

15. 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

16. 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Figure
30000111122223333444455556666777788889999101010101111
11111212121213131313141414141515151516161616171717171
81818181919191920202020212121212222222223232323242424
24252525252626262627272727282828282929292930303030313
13131323232323333333334343434353535353636363637373737
383838383939393940404040
Total Monthly Revenue
Total Monthly Costs
Total Monthly Profit
Figure 3
Incremental Breakeven of Marketing Program
0
0
0
0
0
0

17. 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

18. 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

19. 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

20. 0
0
0
0
0
0
0
0
0