Assignment task description 

This assignment is designed to provide you an opportunity to work with a range of real world like  (simulated) financial data and information and analyse them and interpret the outcomes using the  concept and principles of finance you have learnt in this unit. This assignment tests your both  theoretical understandings and practical skills.  

This assignment requires you to answer a number of assignment questions using the information  provided in Appendixes A – D. It is important that you (i) show or define all variables (ii) specify and  display appropriate formula (where appropriate) and show all workings. Workings are not necessary  when used EXCEL but still need to define variables and show formulas. While you may use EXCEL for  some calculation, you must complete your assignment in word document.

Introduction

In this assignment, simulated data based on real-world transactions have been used to perform calculations and draw interpretations. Financial calculations have been made using MS Excel, and the results of the calculations help in coming up with observations. Concepts such as Cost of capital, the market value of shares, the Dividend discount model and risk-free rate have been discussed in the below solution.

Solution

Calculate the annual returns for Apple Ltd, Orange Ltd and the market using the information provided in Appendix A. Compare the annual returns of the market and 2 companies and comment.  

Step 1 –The formula to calculate return (Current value – Previous value) / Previous value

Step 2 – Calculate the average of the returns for Apple Ltd, Orange Ltd and the market using the AVERAGE function of Excel.

The average annual return is calculated as an average of the return of the given period of 1 year for each company. The same technique has been adopted for the market index.

(Some parts of the solution has been blurred due to privacy protection policy)