MAF302 CORPORATE FINANCE Trimester 2, 2015

GROUP ASSIGNMENT (30%) Due date: 18 September 2015, 5.00pm
Instructions:
1) This assignment is to be completed in a group of 3 students, except under special circumstances. Please enrol yourselves in a group via the MAF302 unit website in
CloudDeakin. Once you have finalized your group, you can formally join one of the groups (numbered from 1-130) using the tab: ‘Collaborate’ -> ‘Groups’. Please
coordinate amongst your group members, so that you join a group at the same time and do not join the wrong group. Students do not necessarily have to be from the same
campus, lecture or seminar to be in the same group. You may use the discussion forum in CloudDeakin to find your group members. Discussions amongst group members can
then happen within the group.
2) There are six tasks in the assignment, summarized under Mark Allocation (page 4). The total marks for this assignment is 100. The marks will be scaled to reflect
the 30% weight in the final marks for this unit. To obtain maximum marks in the assignment, you need to show the relevant steps, reasons for your choices and/or
financial models, not just the answer.
3) Late assignments will be penalized at a rate of 5% of the overall mark per calendar day late. For example, if your assignment scores 26 out of 30 but is 4 days
late, the final result would be 26 x (1 – 0.05 x 4) = 20.8 out of 30.
4) An electronic copy of the assignment has to be uploaded to Cloud Deakin by 5.00pm, 18 September 2015. Please submit (a) an Excel file with full workings, formulas,
and reasons behind your choices and (b) a Word file with all the writing and reports. Please go to the tab: ‘Assessments’ -> ‘Assignments’ -> ‘T2 2015 MAF302 Group
Assignment’ for the submission. Please submit well before the cut-off time as you may experience high traffic closer to the cut-off time. The uploaded soft copy in
CloudDeakin will be considered the official copy and it is the time of upload of this copy that will determine if the assignment is submitted on time. Hard copies will
not be accepted.
5) The assignment should be prefaced by one assignment cover sheet that contains the names and student ID numbers of all group members. All group members should sign a
hard copy of the assignment cover sheet and make it into a soft copy by scanning, imaging with a device or using other methods. Do not use multiple assignment
coversheets.
6) Do not employ ‘ghost-writers’ to complete your assignment. Copying someone else’s work without appropriate citations and referencing is considered plagiarism.
Plagiarism offences will be severely penalized according to university rules. Refer to the following website for further information:
http://www.deakin.edu.au/students/study-support/referencing/plagiarism
7) Contact the lecturers and/or tutors by posting your question(s) on the subject webpage (CloudDeakin) if you have any further queries regarding the assignment.
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MAF302 CORPORATE FINANCE Trimester 2, 2015
Case Study: Woolworths
Founded in 1924, Woolworths (ASX ticker: WOW) is now a household name and one of the largest food retailers in Australia and New Zealand. Woolworths’ large market
capitalization puts it on the S&P/ASX50 list. It operates in five divisions: Australian Food and Liquor, New Zealand Supermarkets, General Merchandise, Hotels, and
Home Improvement. It has around 200,000 employees and the Woolworths group services 29.4 million customers per week. Together with Coles, Woolworths captures the
greatest market share in the supermarket industry in Australia. However, ALDI, IGA, and other supermarkets have stepped up the competition and challenged Woolworths’
competitive advantage in recent years.
You are part of a team of young, bright consultants and financial analysts. Your team is assigned to complete an analysis and valuation report on Woolworths. Your task
includes the following:
1. Provide a brief overview of the Australian supermarket industry and the strengths and weaknesses of Woolworths in the industry. Discuss Woolworths’ challenges in
recent years. You may use recent news articles to support your claims. 2. Highlight Woolworths’ corporate and social responsible (CSR) activities and its contribution
to society. 3. Describe and briefly discuss Woolworths’ a. current capital structure; b. payout ratio, earnings per share (EPS), and dividend per share (DPS) in the
past five years. 4. Calculate the Woolworths’ weighted average cost of capital (WACC). Use the Capital Asset Pricing Model (CAPM) to find the cost of equity. You may
assume that the market value of debt is close to its book value. 5. Calculate the intrinsic value of Woolworth using the valuation techniques we covered in this unit.
State your reasons and/or assumptions you made in your calculations.
Woolworths’ 2014-15 financial report will be released on 28 Aug 2015. It contains much of the information you need to complete most of the tasks above. You are
examined on the corporate finance concepts, financial techniques used, and the reasoning behind your choices in working through the assignment. Use the mark allocation
as a guide to the scope and depth of your analysis.
Useful resources/sites:
a. Woolworths group (WOW): www.woolworthslimited.com.au b. Yahoo! Finance: au.finance.yahoo.com c. The Australian Securities Exchange (ASX): www.asx.com.au d. The Age:
www.theage.com.au e. The Reserve Bank of Australia (RBA): www.rba.gov.au f. DatAnalysis from Deakin Library
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MAF302 CORPORATE FINANCE Trimester 2, 2015
Work Plan Template
Instructions: 1. Using this form as a template, develop a work plan for each of the goals identified. Add additional steps as required. 2. Distribute copies of the
work plan to members of the group. 3. Bring copies to meetings to review and update regularly. Steps What should be done? Responsibilities Who will do It?
Timeline By when? (Day/Month) Resources A. Resources Available B. Resources Needed Step 1: A. B. Step 2: A. B.
Step 3: A. B. Step 4: A. B.
Step 5: A. B.
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MAF302 CORPORATE FINANCE Trimester 2, 2015
Reflection Report
In the process of completing your written report, did the group meet the timeline identified in the Work Plan? Overall, how useful was the Work Plan in helping group
members achieve their tasks independently? (100 words)
Mark Allocation
Your report will be marked out of 100 reflecting the 30% weight in your overall assessment. Detailed allocation of marks is as follows:
Task Marks 1. Overview, Woolworths’ strengths, weaknesses, and challenges 10 2. Woolworths’ CSR activities and contributions 10 3. Woolworths’ current capital
structure and payout history 15 4. Woolworths’ WACC 30 5. Valuation of Woolworths 25 6. Completion of work plan and reflection report 10 Total 100
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