This is a group project.
Please form groups of 4 students;
There will be one report per group.
This multiple part assignment has several due dates.
Select any publicly traded hospitality firm*
Assignment 1 – Sizing up your firm** (be guided by the methodology in chapter 2
(i) Analyze your firm’s 3-year financial performance using common-sized statements
(ii) Analyze your firm’s 3-year financial performance using ratio analysis
Assignment 2- Projecting your firm’s future performance
(i) Create proforma income statements and balance sheets for the next two years (use the spreadsheet from the Proforma Statement assignment)
(ii) Perform appropriate sensitivity analysis and alternate scenario, by varying the growth rate in sales and working capital variables (collection period, days sales in inventory and account payable period).
Assignment 3 – Cost of Capital – Due April 13 2020
(i) Compute the cost of equity for your firm (use CAPM; Assume the risk-free rate is 4% and the market risk premium is 5%; obtain beta from any finance website eg Yahoo Finance)
(ii) Compute the after-tax cost of debt
(iii) Compute the weighted average cost of capital using the book value of debt and the market value of equity.
Grading will be based on the following:
Analysis and computations: 50
The final project should be a formal report including references– typed double spaced 12 point font.
The final report should include the content of assignments 1,2&3 and be no more than 7 pages.
However, you can use an unlimited number of appendices, spreadsheets, graphs etc.
*The instructor must approve the firm selected by each group