Business Finance Assignment Help
Master of Professional Accounting
Assessment Task 3 – Assignment
Business Finance
Assessment
Task Description
Victoria Tokoeke
Builders (VTB) constructs prestige homes in Victoria. VTB has experienced rapid
growth because of the reputation they build up in the construction industry.
Max and Wilson equally own the Business. The original partnership agreement
gave each 50 000 shares. They have decided they should value their holdings in
the business. To get, started, they have gathered the following information
about their main competitors:
|
Names of
Competitors |
Earnings per
share (EPS) ($) |
Dividends per
share (DPS) ($) |
Share price ($) |
ROE |
Required rate
of return (R) ($) |
|
Bright Homes |
1.30 |
0.16 |
25.34 |
8.5% |
10% |
|
Cool Homes |
1.95 |
0.23 |
29.85 |
10.5% |
13% |
|
Expert Homes |
0.96 |
0.14 |
22.13 |
9.78% |
12% |
|
Industry
average |
1.40 |
0.18 |
25.77 |
9.59% |
11.67% |
Last year, VTB
had an EPS of $3.15 and paid dividend owners $ 0.90 per share. The company also
had a return of equity of 17%. Max and Wilson believe that 14% is an
appropriate required return for the company.
To evaluate
their business Max and Wilson hired Josh Samuel as a consultant, and asked him to
submit a report about company share price based on market movements.
Samuel has
examined the company financial statements, as well as those of their
competitors. Although VTB currently has a reputational advantage, his study
indicates that other companies are investigating ways to improve their own
standing. Given this, Samuel believes that VTB reputational advantage will last
for only the next five years. After that period, the company’s growth will
probably slow to the industry growth average. Additionally, he believes that
the required rate of return used by the company is too high. He believes the
industry average required return is more appropriate. Based on above
assumptions, Samuel asked your support to prepare a report.
In your report:
1. Explain
dividend growth model.
2. Compare
and contrast constant dividend growth model and non- constant dividend growth
model.
3. Estimate
the share price for VTB based on above assumptions.
This assignment must be written/structured in the
form of a ‘business report’. That is, it must have a/an;
(a) Executive summary (between 100 to 150 words),
(b) Introduction that;
Succinctly summarizes this assignment’s topic and
its key issues, controversies, etc. (no more than 200 words), and
(c) Body that
addresses all the requirements – see above 1-3(no more 1000 words),
(d) Conclusion that sums up the mains issues of this
assignment (no more than 200 words), and
(e) Reference list containing all cited works.
(f) Proper English Grammar, appearance, format, etc.
At least 4 recognized journal article should be
cited.
·
This
assignment should be completed individually.
·
All work must be submitted on Moodle by
the due date along with a completed Assignment Cover Page.
·
The assignment must be in MS Word
format, 1.5 spacing, 11-pt Calibri (Body) font and 2 cm margins on all four
sides of your page with appropriate section headings.
Reference sources
must be cited in the text of the report, and listed appropriately at the end in
a reference list using APA 6th edition for the School of Business.
USA 
India