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Captured with Xnip Balance Sheet as at 31/12/19 ASSETS LIABILITIES Notes 110 Cash Accounts Receivable Inventory Property, plant & equipment 210 130 220 650 1,040 Accounts payable Bank loan (interest only) Mortgage Loan Corporate bonds 510 310 Total Assets 2,040 Total liabilities 1,140 SHAREHOLDERS' EQUITY Ordinary shares Preference Shares Retained earnings Total shareholders' equity 450 210 240 900 Total liabilities and shareholders' equity 2,040 Notes 1. The interest rate on the bank loan is 9% p.a. 3. 2. The interest rate on the mortgage loan is 5.9% p.a. The corporate bonds have a credit rating of AA and have 8 years to maturity. They make quarterly coupon payments at a coupon rate of 5% p.a. The ordinary shares are shown on the balance sheet at their book value of $1 per share. They have a beta of 1.8. They are expected to pay a dividend of $0.07 next year. The dividend is expected to grow at a rate of 10% p.a. for the following 4 years, and after that it will grow at a constant rate of 4% p.a. in perpetuity. 5. The preference shares have a par value of $1 each and are shown on the Balance Sheet at their par value. They pay a constant dividend of $0.05 and they are currently trading for $1.06. 6. The expected return on the market is 8.7%. 4 yr 1 yr 113 124 2 yr 149 8 yr 365 Rating 1 AAA AA+ AA 9 yr 401 160 376 412 135 423 AA- A+ 434 221 232 243 254 265 276 287 298 171 182 193 204 215 226 237 6 yr 293 304 315 326 337 348 359 370 387 398 409 7 yr 329 340 351 362 373 384 395 406 417 428 5 yr 257 268 279 290 301 312 323 334 345 356 367 378 10 yr 437 448 459 470 481 492 503 445 456 420 431 A- 467 478 489 514 309 381 525 3 yr 185 196 207 218 229 240 251 262 273 284 295 306 317 328 339 350 361 372 383 248 442 453 464 475 392 BBB+ BBB BBB- BB+ BB BB- 500 259 320 331 403 146 157 168 179 190 201 212 223 234 245 256 267 278 289 300 311 439 511 536 547 558 486 342 353 389 569 B+ 364 375 580 591 R 270 281 292 303 314 325 336 347 358 369 450 461 472 483 494 505 516 522 533 544 555 566 577 386 602 414 425 436 447 458 469 480 491 502 513 400 411 422 433 444 455 466 477 CCC+ CCC CCC- CC 397 408 419 430 441 497 508 519 530 541 552 563 574 585 527 588 599 610 613 624 635 646 657 322 394 333 538 549 405 621 Captured with Xnip FINIFOF - FUNDAMENTALS OF FINANCE - ASSIGNMENT Online Data Follow the instructions below to locate online data that you will need for your Assignment. Read all intructions on this page very carefully - don't just collect the requested data. The instructions on this page tell you exactly what to do with the data when completing the other parts of your Assignment. 1. Determine Port Adelaide's tax rate. Go to www.ato.gov.au In the Search box at the top of the screen, enter 'Company tax rates' and click the magnifying glass. You may need to click on more than one link to figure out the appropriate tax rate for Port Adelaide. Enter the company tax rate for this company for the 2019/20 tax year (as a percentage) in the box below. (Hint: Port Adelaide's turnover is over $50 million.) Port Adelaide's tax rate: 30.0% 2. Find the yield on 8-year and 10-year Australian Treasury bonds. Goto www.rba.gov.au Click on "Statistics" near the top of the page, and then, under the subheading "Economic and Financial Statistics", click on "Interest Rates" (Depending on your browser, you may then have to scroll up until you see the Interest Rates section.) Click on the "XLS" link to open the spreadsheet containing "Indicative Mid Rates of Commonwealth Government Securities - F16". This spreadsheet contains daily yield data for Australian Treasury bonds on issue on a given date. Each column conains yields for a specific bond. Each row contains the yields for each bond for a given date - the date shown in Column A. Scroll down to find the yields on 9 August 2019. Row 3 of the RBA spreadsheet contains the maturity date of each bond. Search along Row 3 to find the column containing the bond that is closest to maturing 10 years from 9 August 2019. If you find that the date that is 10 years from 9 August 2019 falls between two maturity dates (which it almost certainly will), make sure you select the bond that will have MOST RECENTLY MATURED on that date - not the one that will next mature after that date. Make sure you are looking up yields for "Treasury Bonds", as specified in Row 2. If the entry in Row 2 says "Treasury Indexed Bonds", you have gone too far. Then go down that column to find the yield as at 9 August 2019. The value you s Treasury bonds on 9 August 2019, which we will use as the risk-free rate in the Capital Asset Pricing Model in Part 1 of the Assignment. Enter the 10-year risk-free rate in the box below (as a percentage to 3 decimal places). 10-year risk-free rate: 0.970% Search along Row 3 of the RBA spreadsheet to find the column containing the band that is closest to maturing 8 years from 9 August 2019 Again, if the date that is 8 years from 9 August 2019 falls between two maturity dates, select the bond that will have most recently matured on that date - not the bond that will next mature after that date. Then go down that column to find the yield for that bond as at 9 August 2019. In Part 1 you will add the credit spread for Port Adelaide's bonds to the 8-year risk-free rate to determine the before-tax cost of the company's bonds. Enter the 8- year risk-free rate in the box below (as a percentage to 3 decimal places). 8-year risk-free rate: 0.905% Captured with Xnip Balance Sheet as at 31/12/19 ASSETS LIABILITIES Notes 110 Cash Accounts Receivable Inventory Property, plant & equipment 210 130 220 650 1,040 Accounts payable Bank loan (interest only) Mortgage Loan Corporate bonds 510 310 Total Assets 2,040 Total liabilities 1,140 SHAREHOLDERS' EQUITY Ordinary shares Preference Shares Retained earnings Total shareholders' equity 450 210 240 900 Total liabilities and shareholders' equity 2,040 Notes 1. The interest rate on the bank loan is 9% p.a. 3. 2. The interest rate on the mortgage loan is 5.9% p.a. The corporate bonds have a credit rating of AA and have 8 years to maturity. They make quarterly coupon payments at a coupon rate of 5% p.a. The ordinary shares are shown on the balance sheet at their book value of $1 per share. They have a beta of 1.8. They are expected to pay a dividend of $0.07 next year. The dividend is expected to grow at a rate of 10% p.a. for the following 4 years, and after that it will grow at a constant rate of 4% p.a. in perpetuity. 5. The preference shares have a par value of $1 each and are shown on the Balance Sheet at their par value. They pay a constant dividend of $0.05 and they are currently trading for $1.06. 6. The expected return on the market is 8.7%. 4 yr 1 yr 113 124 2 yr 149 8 yr 365 Rating 1 AAA AA+ AA 9 yr 401 160 376 412 135 423 AA- A+ 434 221 232 243 254 265 276 287 298 171 182 193 204 215 226 237 6 yr 293 304 315 326 337 348 359 370 387 398 409 7 yr 329 340 351 362 373 384 395 406 417 428 5 yr 257 268 279 290 301 312 323 334 345 356 367 378 10 yr 437 448 459 470 481 492 503 445 456 420 431 A- 467 478 489 514 309 381 525 3 yr 185 196 207 218 229 240 251 262 273 284 295 306 317 328 339 350 361 372 383 248 442 453 464 475 392 BBB+ BBB BBB- BB+ BB BB- 500 259 320 331 403 146 157 168 179 190 201 212 223 234 245 256 267 278 289 300 311 439 511 536 547 558 486 342 353 389 569 B+ 364 375 580 591 R 270 281 292 303 314 325 336 347 358 369 450 461 472 483 494 505 516 522 533 544 555 566 577 386 602 414 425 436 447 458 469 480 491 502 513 400 411 422 433 444 455 466 477 CCC+ CCC CCC- CC 397 408 419 430 441 497 508 519 530 541 552 563 574 585 527 588 599 610 613 624 635 646 657 322 394 333 538 549 405 621 Captured with Xnip FINIFOF - FUNDAMENTALS OF FINANCE - ASSIGNMENT Online Data Follow the instructions below to locate online data that you will need for your Assignment. Read all intructions on this page very carefully - don't just collect the requested data. The instructions on this page tell you exactly what to do with the data when completing the other parts of your Assignment. 1. Determine Port Adelaide's tax rate. Go to www.ato.gov.au In the Search box at the top of the screen, enter 'Company tax rates' and click the magnifying glass. You may need to click on more than one link to figure out the appropriate tax rate for Port Adelaide. Enter the company tax rate for this company for the 2019/20 tax year (as a percentage) in the box below. (Hint: Port Adelaide's turnover is over $50 million.) Port Adelaide's tax rate: 30.0% 2. Find the yield on 8-year and 10-year Australian Treasury bonds. Goto www.rba.gov.au Click on "Statistics" near the top of the page, and then, under the subheading "Economic and Financial Statistics", click on "Interest Rates" (Depending on your browser, you may then have to scroll up until you see the Interest Rates section.) Click on the "XLS" link to open the spreadsheet containing "Indicative Mid Rates of Commonwealth Government Securities - F16". This spreadsheet contains daily yield data for Australian Treasury bonds on issue on a given date. Each column conains yields for a specific bond. Each row contains the yields for each bond for a given date - the date shown in Column A. Scroll down to find the yields on 9 August 2019. Row 3 of the RBA spreadsheet contains the maturity date of each bond. Search along Row 3 to find the column containing the bond that is closest to maturing 10 years from 9 August 2019. If you find that the date that is 10 years from 9 August 2019 falls between two maturity dates (which it almost certainly will), make sure you select the bond that will have MOST RECENTLY MATURED on that date - not the one that will next mature after that date. Make sure you are looking up yields for "Treasury Bonds", as specified in Row 2. If the entry in Row 2 says "Treasury Indexed Bonds", you have gone too far. Then go down that column to find the yield as at 9 August 2019. The value you s Treasury bonds on 9 August 2019, which we will use as the risk-free rate in the Capital Asset Pricing Model in Part 1 of the Assignment. Enter the 10-year risk-free rate in the box below (as a percentage to 3 decimal places). 10-year risk-free rate: 0.970% Search along Row 3 of the RBA spreadsheet to find the column containing the band that is closest to maturing 8 years from 9 August 2019 Again, if the date that is 8 years from 9 August 2019 falls between two maturity dates, select the bond that will have most recently matured on that date - not the bond that will next mature after that date. Then go down that column to find the yield for that bond as at 9 August 2019. In Part 1 you will add the credit spread for Port Adelaide's bonds to the 8-year risk-free rate to determine the before-tax cost of the company's bonds. Enter the 8- year risk-free rate in the box below (as a percentage to 3 decimal places). 8-year risk-free rate: 0.905%

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