AMP Limited is a large financial services company which commenced trading in 1849 as the Australian Mutual Provident Society (AMP). It demutualised and listed on the Australian Stock Exchange (ASX) in 1998. AMP provide a range of financial services to customers in Australia and New Zealand including banking, financial planning, wealth management and superannuation services.
As part of the finance team of AMP Limited you have been tasked with reviewing and preparing a report on the capital structure of the firm to critique whether the firm has been successful in maximising wealth generation for shareholders.
Your report should be approximately 1000 words (in total) and cover the following areas:
• Using data from the firm's 2017 financial year annual report and other sources assume that the firm has a Beta of 1.47 (Reuters) and that capital return on the market for 2017 was 8.54%: o Categorise the AMP's current capital structure into debt and equity using its 2018 balance sheet. o Calculate the firm's after-tax Weighted Average Cost of Capital (include any assumptions you have made in developing this metric). o Using the CAPM calculate whether the firm is providing an appropriate return given its risk.