FINC 355 WEEK 5 DISCUSSION:
1. Discuss advantages, disadvantages, and characteristics of tax deferred annuities.
2. Discuss similarities and differences between the different approaches to non-qualified deferred compensation plan funding and benefits.
3. Discuss the tax implications related to Section 457 plans.
FINC 440 WEEK 5:
1. Company Analysis and Valuation Research Paper
The Company Analysis and Valuation Research paper was assigned. You should be well along working on analysis of a financial services company in parallel with your short research paper assignments. Please find attached a content guide
2. Discounted Cash Flow Valuation – Due
Using the facilities of ValuePro (http://www.valuepro.net) for the company that you have selected to study conduct a discounted cash flow valuation. The analysis should explain each variable used in the analysis, why you accepted the given input, or how and why you changed a variable. The analysis should also examine the relevant cash flows, compare the final valuation to the stock’s current price and explain any differences. (Note: Remember to adjust the equity risk premium to between 5% and 6%; also, adjust the growth rate to an appropriate long-term growth rate.)
Calculation of Unlevered Free Cash Flow
EBIT ( + ) Amortization of non-deductible goodwill EBITA ( − ) Taxes on EBITA (EBITA × projected tax rate) [Unlevered net income]
( + ) D&A and other non-cash charges affecting EBIT (excl. non-deductible goodwill amortization) ( + ) Changes in deferred taxes ( − ) Capital expenditures ( − ) Increase in non-cash working capital
[Unlevered free cash flow] (UFCF)
1. Questions to Ask CEO About Valuation – If you were directed to make a visit to a company’s CEO for the purpose of obtaining information to complete a valuation of that company’s common stock, what questions would you ask and why?
2. Adjusted Present Value –
Adjusted Present Value (or APV) is an alternative to the discounted free cash flow valuation approach. Of what value is the APV method in your judgment? Should an analyst use both methods?
3. Non-Operating Assets –
Is it important to address the value of non-operating assets in arriving at an estimate of the value of equity per share? Why? Offer an example?
4. Increasing Value of Firm –
If the board of directors of the firm where you were the CEO is calling for an increase in the value of the firm, what would you do to respond positively to that direction? (Hint, see Chapter 31.)
5. Present Discounted Cash Flow Valuation –
Post the results of the Discounted Cash Flow Valuation that you prepared for this week’s assignment that is to be submitted to the Assignment Folder.
6. Most Important Things Learned –
What are the most important things you learned from the study of this week’s readings and assignments?