DEGREE: MSc in Engineering Management

Module: Corporate Finance

Assignment Title: A thorough research of Corporate Financial Decision and

Valuation
Assignment Type: Essay
Word Limit: 3000 words (+/- 300)
Weighting: 100%
Issue Date: 28/05/2024

Submission Date: 0 2 / 0 7 / 2 0 2 4

Feedback Date: 23/07/2024

Plagiarism:
When submitting work for assessment, students should be aware of the
InterActive/Canvas guidance and regulations in concerning plagiarism. All submissions
should be your own, original work. Please note that you must not submit the same
assignment for two different modules within your course.
You must submit an electronic copy of your work. Your submission will be
electronically checked.

Learner declaration

I certify that the work submitted for this assignment is my own and research sources
are fully acknowledged.

Student signature: Date:

Harvard Referencing:
The Harvard Referencing System must be used. The Wikipedia, UKEssays.com or
similar websites must not be used or referenced in your work.

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Learning Outcomes:

LO1 Identify, describe, and specify to familiarize learners with the concepts and
procedures of financial management.

LO2 Identify, describe, specify, and characterise to assist learners to build and polish
their analytic talents in the trade-off firms face between tax advantages and various costs
of debt.

LO3 Describe, specify, and analyse how financial management knowledge and skills are
applied to the corporate decision-making process.

LO4 Critically specify how to use appropriate valuation method(s) depending on the
context of the corporate decision and analyse securities and investment projects.

Assessment Criteria: Weighting 100%

3000 words

Tasks (All tasks are equally weighted):

Introduction
This assignment allows you to evaluate and critically analyse the selected positions within a
company’s annual report. These positions are of crucial importance for obtaining final
performance and economic benefits. You are to select TWO publicly listed companies listed
on the DAX (Preferably in 2 different sectors, for example, one company in the retail sector
and the other in the utility sector but don’t select any banks). Ensure that the selected
companies have all the necessary information required for the assignment.

1. Critically analyse the financial statements (Balance sheet and income statement) of the
selected listed companies by conducting a financial ratio analysis. Marks will not be
awarded for vague discussions. LO1

2. You are a manager in an engineering company and you have idle cash you would like
to put it temporarily in a profitable investments. Accordingly, critically evaluate the
following alternative investments and decide which one is the best and justify why. LO1
LO3

Economic Possible return Probabilities Possible return Probabilities Possible return Probabilities
status A A B B C C
Booming 20% 0.8 25% 0.7 21% 0.7
Status Quo 15% 0.1 13% 0.2 16% 0.1
Recession 8% 0.1 5% 0.1 9% 0.2

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 3. A top management of an engineering company asked you to calculate the fair price of
the company’s stock. The current price in the market is 150 euros and the company
declared to distribute the following dividends for the next five years (11, 12, 14, 15,
and 16) and then it expects the dividends to grow by 10% for unforeseeable periods
having a 20% required rate of return. Is the stock price overpriced or underpriced and
why? LO3

4. Review the literature and critically summarize and analyse the determinants of firm
performance in a specifically interested sector. Marks will not be awarded without
relevant in-text citations and references. LO2 LO3

5. Critically perform a capital budgeting analysis for the following data to decide on
which project is better for the company to maximise its market value. Marks will
not be awarded for vague discussions. LO2 LO4

€ €
Project A Project B D1 (Common) 11.00 9.00
€ €
CF0 -€ 2,100,500.00 -€ 2,500,900.00 P0 (Common) 250.00 300.00
CF1 € 100,000.00 € 150,000.00 g (Common) 5% 6%
€ €
CF2 € 200,000.00 € 250,000.00 D1 (Preferred) 5.00 6.00
€ €
CF3 € 400,000.00 € 350,000.00 P0 (Preferred) 100.00 120.00
CF4 € 450,000.00 € 450,000.00 Tax rate 35% 35%
CF5 € 600,000.00 € 550,000.00 Interest exp. 10% 8%
Weight of
CF6 € 800,000.00 € 500,000.00 Common 60% 30%
Weight of
CF7 € 1,200,000.00 € 1,500,000.00 Preferred 30% 30%
CF8 € 1,500,000.00 € 1,800,000.00 Weight of Debt 10% 40%
CF9 € 1,800,000.00 € 1,820,000.00
CF10 € 2,000,000.00 € 2,800,000.00

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 GUIDANCE ON ASSESSMENT
All materials must be properly referenced under Harvard conventions. The length required is
3,000 words with tasks equally weighted. The writing style should be formal academic /
Assignment writing style with in-text referencing to support your comments and observations.
Originality, quality of argument and good structure are required. The Assignment should
demonstrate sound understanding and ability to apply knowledge and theory in Engineering
Management context with additional marks being awarded for juxtaposition and insight of
issues.
Grading Criteria

Grading 70%+100 60-69% 50-59% 0 -49% Fail

Criteria
Generic skills: Comprehensive and Well structured Good Assignment in Very poor
communication and correctly structured Assignment which most aspects but Assignment which is
presentation. assessment. Style follows appropriate suffers from incorrectly structured
of writing is very format but some variations in quality and contains major
fluent and develops aspects of layout and the layout errors and omissions.
a coherent and and referencing contains some Style of writing is
logical argument. could be improved. inadequacies. Style descriptive, lacks
Excellent Style of writing is of writing is coherence and
referencing. fairly fluent. Good satisfactory. fluency. Poor
referencing. Referencing needs referencing.
improving.
Knowledge & Demonstrates Wide range of Good range of Very poor range of
Understanding excellent knowledge knowledge knowledge knowledge, research
of theory and demonstrated and demonstrated but and interpretation of
provides critical evidence of good with some room for information that is
theoretical understanding of improvement. Some subjective and lacks
underpinning. Very the topic. understanding conceptual
good interpretations Ability to interpret displayed of the coherence. There is
and summarising of and summarise topic. no clear identification,
main themes. succinctly. Summary and understanding or
interpretation are interpretation of main
satisfactory. themes.
Analysis Excellent use of Very good use of Use of theory and Very poor use of
theoretical and the theoretical and concepts limited in theory and very little
conceptual models conceptual models scope and depth but application of core
to guide analysis with good critical relevant. Application concepts.
linked with a critical discussion. Has could be improved Very little or limited
discussion of main applied a range of and there is a analysis and
themes. analytical skills with tendency towards evaluation in relation
Has demonstrated greater description rather to fundamental
an ability to independence and than application of principles and
discriminate in the understanding of concepts. business practise.
use of more more abstract data
abstract concepts or concepts.
and techniques.
Application of Logical presentation Very good account Good account of Very poor account of
relevant theory to of themes with of main themes with main themes with main themes with
business concepts appropriate sound application. some attempt at little or no application
examples being Good attempt at application. Limited between models and
demonstrated. applying models to evidence of argument.
Models have been the argument. Fairly synthesis.
clearly applied to good attempt at
the argument. synthesising the
salient points.