Corporate Finance Assignment
You are required to:
Produce a valuation of Cadbury Schweppes plc, and a report discussing how you have arrived at that valuation and the finance theory underpinning it.
The report should be no more than 3000 words
The calculation itself together with anything else you consider relevant can be put in the appendices.
Suggestions:
Issues to consider in the report:
1. The cost of Capital
~The Capital Asset Pricing Model (CAMP)
~The theory
~The evidence
~Practical issues when using the CAMP
2. The future cash flow
~Strategy of the firm and forecasted performance
~Estimated return on invested capital
~Interaction of growth, ROIL and reinvestment
3. A comparison of your valuation and market value
~The sensitivity of your valuation to changes in any of the figure you have estimated
ASSIGNMENT CRITERIA
1. Demonstrate a clear understanding of the valuation model and the ability to apply it to a real company.
2. Demonstrate a critical awareness of the model and the difficulty in estimating the inputs required. Particular emphasis should be placed on the Capital Asset Pricing Model.
In order to achieve 1above;
- The valuation calculation itself
- The ability to identify which inputs have a key influence on the valuation
- Sensitivity analysis demonstrating how changes in estimates affect the valuation
- Comparison of your valuation with the Market Capitalization
In order to achieve 2 above;
- Discuss the figures you have used in the valuation
- The Capital Asset Pricing Model. Discuss and comment on tests of the model
- The inputs required to use the model and the difficulty in estimating the inputs.
- please follow thaw assignment criteria and the suggestions above to complete the assignment
GENERAL LAYOUT
You can decide how to layout the report
However it may be useful to put any major calculations in the appendix to the report and refer to these as you review your valuation in the main body of the report
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