Finance Project(Data Analysis on Excel Sheet)

art VI:  Cost and Return of Capital (Chapter 11 and 12. 20 points) 1.(5 points) Please use CAPM to estimate shareholder’s expected return of equity (This is your company’s cost of equity). Assume a market risk premium of 7%, and use 3-month T- bill rate from FINRA as the risk-free rate. 2.(5 points) Find your company’s 5-year realized return on equity “5Y Ret” and compare it to the expected return of equity you just calculated, and elaborate on your comments. 3.(5 points) Please go back to your company’s “Bonds” page, calculate an average of all yields of all your company’s bonds (excluding bonds with maturities of less than three years).[ This is a rough estimation since we skip a step to calculate the weighted average cost of debt. ] Compare the average yield of your company’s long-term debt (This is a very rough estimation of your company's cost of debt) with the cost of equity you calculated in 1, and comment on the difference.[ You may go a step further to calculate WACC at this point.] 4.(5 points) Discuss risk and return of equity vs. debt investing. oFrom an investor’s perspective, discuss the certainty of future cash flows between investing in stocks vs. bonds oFrom a creditor’s perspective, do you prefer your company take on a potentially high return yet high risk project? From a shareholder’s perspective, do you prefer your company take on a potentially high return yet risky project? Explain. oWill you rather invest in your company’s stocks or bonds?  Part VII: Executive Summary and Conclusions (10 points) 1.(7 points) After you complete the entire analysis, please write a one-page executive summary to preface your written report. Indicate the purpose(s) of this report and list your major findings. Provide a brief yet comprehensive assessment of your company’s financial management decisions in relation to your company’s asset valuations and risk. 2.(3 points) At the end of your written report, provide a short conclusion regarding your company’s overall financial performance and the soundness of its financial decision making. The ending conclusion should echo the executive summary at the beginning of the report.