Question 1 (Total 100 marks)

Case Study: Capital Budgeting Analysis

For this task, find and analyse the capital budgeting process for a real-world project undertaken by a publicly listed company. If actual financial data is unavailable, you may use hypothetical figures based on similar projects or reasonable assumptions. Your report should include the following components:

Project Background and Objectives: Describe the project’s context, including its purpose, goals, and strategic rationale.

Pro Forma Financial Statements: Develop pro forma financial statements, incorporating estimated revenues, costs, depreciation, and tax impacts, etc.

Cost of Capital: Discuss the risk of the project and determine the project’s cost of capital using relevant parameters.

Capital Budgeting Evaluation: Appraise the project with proper capital budgeting methods.

Analytical Tools: Use tools like financial calculators or Excel to perform calculations, sensitivity analyses, and scenario evaluations.

Your final report should demonstrate your understanding of concepts/knowledge from FIN 203 and provide a well-supported recommendation on the project’s viability. Ensure the report is written clearly and presented in a professional, reader-friendly format.

(Word limit: No more than 5 pages excluding references)