ACCFIN5204 International Corporate Finance

The company is a multi?national manufacturer whose shares and bonds trade on the London Stock Exchange.

It has historically only accepted projects with a discounted payback period of less than 5 years.

Its policy is to remit all overseas cash flows back to the UK at the end of each year.

Debt capital (bonds)

Book value in issue (£m) 200

Market price (£ per £100 nominal) 139.90

Coupon (paid semi?annually) 7.5%

Months since last semi?annual interest payment 6

The company has not issued or redeemed any equity or bonds in the past 5 years

Prospective price earnings ratio of FTSE All?Share index 16.0

Prospective dividend yield of FTSE All?Share index

Rationale

The rationale for this individual assignment is to assess whether you can:

• Apply the taught financial management theories and techniques to a company; and
• Articulate and present your findings and recommendations in a professional manner.

The learning outcomes being assessed

This assignment assesses Intended Learning Outcomes 3 and 4, as set out in the unit specification.

Overview of assignment

You are the financial manager of a listed UK company and your task is to prepare a briefing note for its board of directors to advise it on the following matters:

• Whether the company’s shares are currently fairly valued by the equity market using the price earnings ratio and dividend yield methodologies;
• Whether the company should proceed with an international expansion project which is under consideration by calculating its internal rate of return, net present value and discounted payback period (using your estimate of its current weighted average cost of capital);
• Whether the company’s current capital structure is optimal and, if not, how it can be improved; and
• Whether the company’s dividend policy is optimal and, if not, how it can be improved.

Details of the company (Norwich plc.) and international expansion project (Italy) can be found in the Assessment > Coursework Resubmission section of Brightspace.