Financial Modelling And Forecasting

Assignment Requirements

 

This case study gives you the opportunity to demonstrate your understanding of the two fundamental parts of this subject – forecasting and financial modelling. To demonstrate the practical nature and real-world applicability of your learning, the case study requires you to conduct a financial analysis of The Reject Shop Limited, a company listed on the Australian Securities Exchange (ASX). The purpose of the case study is to produce monthly industry sales forecasts for management’s sales planning purposes, and to build a financial model of The Reject Shop for investment recommendation purposes.

Estimate Discount Rate and Perpetual Growth Rate (3 marks)
To value The Reject Shop from the free cash flows, you need to estimate the weighted average cost of capital (WACC) and the long-run free cash flow growth rate (see Benninga Sections 3.4 and 3.5). i. You will first need to estimate the cost of equity. If you use the CAPM you must state the values and the source for each variable. Beta may be obtained from a reliable source, or you may estimate your own value. Similarly, explain how you calculate the cost of debt.
ii. Estimate The Reject Shop’s WACC.
3
iii. Read Benninga section 3.4 on the long-run free cash flow growth rate. What is your estimate of this figure for The Reject Shop? You must explain how you obtained your estimate.
pls look at the question carefully and use the Australian securities exchange and the reject shop annual report to acquire the data.

 

 

 

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