Page | 1MAC 006 T3 Major Group AssignmentMCR 006 FINANCIAL MANAGEMENTT3 2021 Assessment 2Due date week 10 Friday 11.30 pmTotal marks 50Total weight for subject 15%I/we have read the Assignment Guide in the subject Outline and have applied the word countprinciples to my work.Your assignment should be loaded into Moodle by 11.30 pm on the due date.All times are based on AEDT/AEST time zones.Refer to ‘Time remaining’ on the ‘Assignment’ page in the subject outline to ensure you submit yourassignment by the specified due date and time.ChecklistI/we have completed my assignment using Word.I/we have completed my assignment using Calibri, Arial, fonts.I have added my Personal ID on this page.I have added my word count on this page.I have added my/our Personal ID in front of the filename in the footer on the second page.Each question of my assignment is within the word limit guidelines for that question as per theMy assignment file size is no larger than 2 MB.If tables were required, they are visible as text, not as links or images.I/we have not removed the marking grid from the footer.I/we have submitted my assignment as per the instructionsIn-text referencing required using APA referencing where appropriate.Page | 2MAC 006 T3 Major Group AssignmentGroup Members NameStudent ID A1A2B1MarkPossiblemark152015 ASSIGNMEMT DETAILSThere are 2 parts to this assignment.PART ADiscussion Questions –1. Research and explain the Modigliani Miller theorems and how they can be applied tocapital structure in an organisation. Short Essay (approximately 1,000 words) 15 marks2. The board of directors of an Australian company, Apple Ltd. is unlisted have asked you asthe Finance Director to calculate the company’s cost of capital. The. Using the balancesheet and other information provided below calculate the company’s Weighted AverageCost of capital (1,000 words) 20 marksPage | 3MAC 006 T3 Major Group AssignmentApple LtdBalance sheet as at the 30th June 20202020 2019Page | 4MAC 006 T3 Major Group AssignmentOther Informationa. The cost of debt is 6.5%.b. The cost of equity is to be calculated by applying the CAPM model. Use the followinginformation to calculate the cost of equity.a. The Beta for Apple Ltd Australia is unknown, so you decide to use acomparable company’s Beta, that of Apple Inc listed on the United States StockExchange(use 5 year Beta as quoted on Yahoo finance refer tohttps://au.finance.yahoo.com/ ) as a substitute for your company’s’ beta.b. You note Australian long term Treasury notes (5 years) are considered asuitable risk-free asset. https://www.aofm.gov.au/securities/treasury-bondsc. Using the balance sheet provided for the Australian company above calculate AppleLtd. Australia’s cost of capital.d. Include the total liabilities as your basis for calculating you WACC cost of debtcomponente. The company’s tax rate is 30%f. The Board of Directors have determined that the required rate of return would be 8%g. The current average market return for similar listed companies is 9 %PART B SHORT CASE STUDY (500 words) 15 marksYou have been tasked with analysing two potential investments for Superman Ltd. Thedetails are provided below.Note only investment projects with a positive NPV are accepted. You are to use the costof capital that has been calculated for organisation 5% plus a risk premium for the projectsof 1.5% for your NPV analysis.Investment Aa. A potential investment in a non-listed company, the expected purchase price is $30massume this to be settled and paid in 2020.Cash flows over five years have been provided and are as follows (figures are in 000’s) 20202021202220232024$4,0006,000$7,000$8,000$9,000 Investment Bb. A potential investment in a new product, the expected investment for thedevelopment of the production 2020 is $20m.Net Cash flows over five years have been projected and are as follows (figures are in000’s) 20202021202220232024$3,500$4,000$4,500$6,000$8,000 RequiredPage | 5MAC 006 T3 Major Group AssignmentPrepare a board report with the analysis of the investment proposals. You must includeyour recommendation for one of the investments only and the basis for yourrecommendation.
