Fundamentals of Finance

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Fundamentals of Finance Final Assessment: Outline and Rubric
Purpose of this Assessment
The Final Assessment for this competency is to complete one essay and a series of financial
calculations that address financial systems, ethics, valuation of stocks and bonds, evaluating risk,
capital structure, capital budgeting decisions, and working capital.
Items Required for Submission
In order to demonstrate mastery of this competency, you will submit:
1. Financial calculation spreadsheet
2. A 2-3 page paper on wealth maximization and ethics as noted below in Step Three.
Step ONE: Preparation
In order to prepare for this assignment, it is important to carefully read this document in its
entirety before starting the Final Assessment. Ensure to review each required item and submit the
essay and calculations that align with the rubric. When reviewing each problem, the following
questions should be considered:
1.
2.
3.
4.
What possible tasks are required?
What will you need to complete the essay and problems?
What formulas will you need?
What resources from this competency might you reference to complete this Final
Assessment successfully?
5. Think about possible plans of action for the steps you will take – what strategies will you
use to address each problem?
Final Assessment: Outline and Rubric
1
Fundamentals of Finance Final Assessment: Outline and Rubric
Step TWO: Calculations
Part 1: Financial Calculations
The following financial calculations were covered in the competency content. Calculate the
following seven problems showing formulas for the ratio as well as the answer. Use the provided
Calculation worksheet to include the calculations, computation details (showing your work), and
answers.
Problem #1 – Time Value of Money
a) If a project costs $74,000, will earn $24,000 per year for the next four years, and has a
discount rate of 5%, what is the Net Present Value?
b) What is the present value of an annuity due with a payment of $500 per year at an interest
rate of 9% for 15 years?
Problem #2 – Interest Rates and Bond Valuation
a) Using the following information: $1,000 par value, 11% yield, coupon payment of $100
annually, 10 years to maturity:
1) Calculate the price of the bond
2) If the coupon rate is 8%, calculate the yield to maturity
b) Using the Fisher equation, what is the nominal interest rate if the real rate of interest is
4% and the rate of inflation is 9%?
Problem #3 – Stock Valuation
a) A company has 10 million shares of common stock selling at $50 per share. It pays a
dividend of $4 this year and the dividend is growing at 5% annually. Using the Dividend
Discount Model, what is the cost of equity?
b) If investors require a 7% annual return on a 10% preferred stock with a par value of $100,
what should the stock price be?
Problem #4 – Calculating the Expected Rate of Return
a) Stock ABC has a beta of .7, the risk-free rate is 3%, and the expected market returns are
4%. Using the Capital Asset Pricing Model, what are the expected returns for stock
ABC?
b) Using CAPM, what is the cost of equity if the risk-free rate is 4%, market return is 6%,
and beta is 1.2?
Problem #5 – Raising Capital and Capital Structure
a) A firm believes that if their Earnings before Interest and Taxes increase by 2%, their net
income will increase by 4%. What is their degree of financial leverage?
Problem #6 – Capital Budgeting Techniques
a) If a project costs $74,000 and will earn $24,000 per year for the next four years, and has a
discount rate of 5%, what is the:
Final Assessment: Outline and Rubric
2
Fundamentals of Finance Final Assessment: Outline and Rubric
1) Payback period
2) IRR
Problem #7 – Working Capital and the Cash Conversion Cycle
a) Given the following information: inventory = $20,000, Daily cost of sales = $1,000,
Receivables = $12,000, daily revenue = $4,000, payables = $8,000, daily purchases =
800, calculate:
1) Inventory conversion period
2) Receivables conversion period
3) Payables conversion period
4) Cash conversion period
Step THREE: Short Answer/Essay
Part 2: Essay on Ethical Considerations
The first section of this competency covers financial systems and goals of a firm. Specifically,
under ethical considerations, impediments to wealth maximization are identified. In a 2-3 page,
APA formatted paper, address the following four areas:
1. Impediments to Wealth Maximization​: One impediment to wealth maximization
mentioned in this competency is the agency problem. Identify and describe two agency
costs mentioned in the competency and how they impact employees and their benefit
compensation package.
2. ​Socially Responsible Corporate Behavior​: In this section of the paper, research
corporate social responsibility. Define and describe corporate social responsibility and
the impact to customers, employees, investors, environment, and financial strength.
Include two outside sources to support your definition.
3. Ethical Considerations​:
a. In this section, research a company that has behaved unethically in terms of
corporate social behavior. Explain how they behaved unethically and why they
acted accordingly. Describe how their financial strength was impacted by this
behavior. Provide a link to the company’s Annual Report that indicates the impact
to their financial strength.
b. Research a company that has exemplified ethical behavior and describe how they
illustrated ethical behavior and corporate social responsibility. Reflect on their
behavior and include your opinion if their financial strength was impacted by their
actions and behavior. Provide a link to the company’s Annual Report that
indicates the impact to their financial strength.
This paper should be 2-3 pages in length, Times New Roman 12-point font, and proper APA
format.
Final Assessment: Outline and Rubric
3
Fundamentals of Finance Final Assessment: Outline and Rubric
Step FOUR: Complete Checklist for Submission
Before you submit your work, check to see if you have met the criteria noted below. Did you:
✓
✓
✓
✓
✓
✓
✓
✓
Using the provided worksheet, ensure all 7 calculations are included, showing the formula,
the calculation, and answer for each
Correctly show the formula for each calculation
Clearly show your work for each calculation
Clearly and completely addresses Impediments to Wealth Maximization
Clearly and completely addresses Socially Responsible Corporate Behavior
Clearly and completely addresses Ethical Considerations for two companies
Ensure the essay portion is 2-3 pages in length, APA format, Times New Roman font
Ensure all rubric areas have been addressed
Step FIVE: Submit Your Work
●
Your completed files should be submitted through the Final Assessment page of your
competency.
●
Please note, for files smaller than 10MB (e.g., most Word documents), use the
corresponding “+UPLOAD STUDENT FILE” button to upload your Final Assessment
documents. For larger files of any type (e.g., voice over PowerPoint files, video
presentations), please use the optional TEXT EDITOR to provide a URL where your
tutorial faculty can download your file.
●
How you create a download URL is up to you, but various free online providers, including
Google Drive and Dropbox, offer this service. Please make sure that the URL you provide
can be accessed by anyone with the link. For further instructions on how to create public
links for uploaded files, consult the support pages for your chosen provider.
List of Templates/Resources Needed
The following are some resources that could provide support in your completion of this
assignment:
● Calculation worksheet
Final Assessment: Outline and Rubric
4
Fundamentals of Finance Final Assessment: Outline and Rubric
Scoring Rubric for Final Assessment
Criterion
Financial
Calculation:
Time Value of
Money
EMERGING
Does not answer
all parts of each
question
completely and
provides a weak
analysis and
evaluation of
results where
applicable.
Financial
Calculation:
Interest Rates
and Bond
Valuation
Does not answer
all parts of each
question
completely and
provides a weak
analysis and
evaluation of
results where
applicable.
Financial
Calculation:
Stock
Valuation
Does not answer
all parts of each
question
completely and
provides a weak
analysis and
evaluation of
results where
applicable.
Final Assessment: Outline and Rubric
DEVELOPING
Partially answers
all parts of each
question
completely and
accurately,
showing and
explaining all
steps,
calculations, and
solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
Partially answers
all parts of each
question
completely and
accurately,
showing and
explaining all
steps,
calculations, and
solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
Partially answers
all parts of each
question
completely and
accurately,
showing and
explaining all
steps,
calculations, and
solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
PROFICIENT
Mostly answers all
parts of each
question
completely and
accurately,
showing and
explaining all
steps, calculations,
and solutions
clearly, and
insightfully
analyzing and
evaluating results
where applicable.
Mostly answers all
parts of each
question
completely and
accurately,
showing and
explaining all
steps, calculations,
and solutions
clearly, and
insightfully
analyzing and
evaluating results
where applicable.
Mostly answers all
parts of each
question
completely and
accurately,
showing and
explaining all
steps, calculations,
and solutions
clearly, and
insightfully
analyzing and
evaluating results
where applicable.
EXEMPLARY
Answers all parts of
each question
completely and
accurately, showing
and explaining all
steps, calculations,
and solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
Answers all parts of
each question
completely and
accurately, showing
and explaining all
steps, calculations,
and solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
Answers all parts of
each question
completely and
accurately, showing
and explaining all
steps, calculations,
and solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
5
Fundamentals of Finance Final Assessment: Outline and Rubric
Financial
Calculation:
Calculating the
Expected Rate
of Return
Does not answer
all parts of each
question
completely and
provides a weak
analysis and
evaluation of
results where
applicable.
Financial
Calculation:
Raising Capital
and Capital
Structure
Does not answer
all parts of each
question
completely and
provides a weak
analysis and
evaluation of
results where
applicable.
Financial
Calculation:
Capital
Budgeting
Techniques
Does not answer
all parts of each
question
completely and
provides a weak
analysis and
evaluation of
results where
applicable.
Financial
Calculation:
Working
Does not answer
all parts of each
question
Final Assessment: Outline and Rubric
Partially answers
all parts of each
question
completely and
accurately,
showing and
explaining all
steps,
calculations, and
solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
Partially answers
all parts of each
question
completely and
accurately,
showing and
explaining all
steps,
calculations, and
solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
Partially answers
all parts of each
question
completely and
accurately,
showing and
explaining all
steps,
calculations, and
solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
Partially answers
all parts of each
question
Mostly answers all
parts of each
question
completely and
accurately,
showing and
explaining all
steps, calculations,
and solutions
clearly, and
insightfully
analyzing and
evaluating results
where applicable.
Mostly answers all
parts of each
question
completely and
accurately,
showing and
explaining all
steps, calculations,
and solutions
clearly, and
insightfully
analyzing and
evaluating results
where applicable.
Mostly answers all
parts of each
question
completely and
accurately,
showing and
explaining all
steps, calculations,
and solutions
clearly, and
insightfully
analyzing and
evaluating results
where applicable.
Mostly answers all
parts of each
question
Answers all parts of
each question
completely and
accurately, showing
and explaining all
steps, calculations,
and solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
Answers all parts of
each question
completely and
accurately, showing
and explaining all
steps, calculations,
and solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
Answers all parts of
each question
completely and
accurately, showing
and explaining all
steps, calculations,
and solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
Answers all parts of
each question
completely and
6
Fundamentals of Finance Final Assessment: Outline and Rubric
Capital and the
Cash
Conversion
Cycle
completely and
provides a weak
analysis and
evaluation of
results where
applicable.
Writing
Portion:
Wealth
Maximization
and Agency
Costs
The paper
provides a limited
description of
two agency costs
mentioned in the
competency and
how they impact
employees and
their benefit
compensation
package.
Writing
Portion:
Socially
Responsible
Corporate
Behavior and
Impact to
Financial
Strength
The paper
provides a limited
definition and
description of
corporate social
responsibility and
the impact to
customers,
employees,
investors,
environment, and
financial strength.
This section does
not include two
outside sources to
support the
definition.
Writing
Portion:
This section of
the paper
provides a limited
Final Assessment: Outline and Rubric
completely and
accurately,
showing and
explaining all
steps,
calculations, and
solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
The paper
provides a
partially accurate
description of
two agency costs
mentioned in the
competency and
how they impact
employees and
their benefit
compensation
package.
completely and
accurately,
showing and
explaining all
steps, calculations,
and solutions
clearly, and
insightfully
analyzing and
evaluating results
where applicable.
The paper provides
an accurate
description of
two agency costs
mentioned in the
competency and
how they impact
employees and
their benefit
compensation
package.
accurately, showing
and explaining all
steps, calculations,
and solutions clearly,
and insightfully
analyzing and
evaluating results
where applicable.
The paper
provides a
partially accurate
definition and
description of
corporate social
responsibility and
the impact to
customers,
employees,
investors,
environment, and
financial strength.
This section does
not include two
outside sources to
support the
definition.
This section of
the paper includes
a partial analysis
The paper provides
an accurate
definition and
description of
corporate social
responsibility and
the impact to
customers,
employees,
investors,
environment, and
financial strength.
This section
includes two
outside sources to
support the
definition.
The paper provides a
comprehensive and
accurate definition
and description of
corporate social
responsibility and the
impact to customers,
employees, investors,
environment, and
financial strength.
This section includes
two outside sources
to support the
definition.
This section of the
paper includes an
accurate analysis
This section of the
paper includes a
comprehensive and
The paper provides a
comprehensive and
accurate description
of
two agency costs
mentioned in the
competency and how
they impact
employees and their
benefit compensation
package.
7
Fundamentals of Finance Final Assessment: Outline and Rubric
Ethical
Corporate
Social
Behavior
Writing
Portion:
Ethical
Behavior
APA Writing
Skills
analysis of a
company that has
exemplified
ethical behavior,
how that behavior
was exemplified,
and the impact to
the company’s
financial strength.
Link is not
provided that
shows the
financial impact
of the ethical
behavior.
This section of
the paper
provides a limited
account of a
company that has
behaved
unethically in
terms of corporate
social behavior,
how the company
behaved
unethically, why
the company
acted accordingly,
and how the
company’s
financial strength
was impacted by
this behavior.
Link is not
provided that
indicates how the
unethical
behavior
impacted the
financial strength
of the company.
The essay does
not use APA
effectively or
Final Assessment: Outline and Rubric
of a company that
has exemplified
ethical behavior,
how that behavior
was exemplified,
and the impact to
the company’s
financial strength.
Link is not
provided that
shows the
financial impact
of the ethical
behavior.
of a company that
has exemplified
ethical behavior,
how that behavior
was exemplified,
and the impact to
the company’s
financial strength.
Link is provided
that shows the
financial impact of
the ethical
behavior.
accurate analysis of a
company that has
exemplified ethical
behavior, how that
behavior was
exemplified, and the
impact to the
company’s financial
strength. Link is
provided that shows
the financial impact
of the ethical
behavior.
This section of
the paper includes
a partially
accurate account
of a company that
has behaved
unethically in
terms of corporate
social behavior,
how the company
behaved
unethically, why
the company
acted accordingly,
and how the
company’s
financial strength
was impacted by
this behavior.
Link is not
provided that
indicates how the
unethical
behavior
impacted the
financial strength
of the company.
The essay uses
APA and
demonstrates
This section of the
paper includes an
accurate account
of a company that
has behaved
unethically in
terms of corporate
social behavior,
how the company
behaved
unethically, why
the company acted
accordingly, and
how the
company’s
financial strength
was impacted by
this behavior. Link
is provided that
indicates how the
unethical behavior
impacted the
financial strength
of the company.
This section of the
paper includes a
comprehensive and
accurate account of a
company that has
behaved unethically
in terms of corporate
social behavior, how
the company behaved
unethically, why the
company acted
accordingly, and how
the company’s
financial strength was
impacted by this
behavior. Link is
provided that
indicates how the
unethical behavior
impacted the
financial strength of
the company.
The essay uses
APA and
demonstrates
The essay uses APA
format and
demonstrates
8
Fundamentals of Finance Final Assessment: Outline and Rubric
demonstrate
academic writing
in a clear,
concise, or correct
manner. The
paper is not 2 to 3
pages in length, is
not
double-spaced,
did not use Times
New Roman, 12
point font. There
are more than 8
grammar,
punctuation or
APA errors.
Final Assessment: Outline and Rubric
academic writing
displaying some
clarity,
conciseness, and
correctness. The
paper is 2 to 3
pages in length,
double-spaced,
using Times New
Roman, 12 point
font. There are
5-8 grammar,
punctuation or
APA errors.
academic writing
with a presentation
of all material,
displaying clarity,
conciseness, and
correctness. The
paper is 2 to3
pages in length,
double-spaced,
using Times New
Roman, 12 point
font. There are 3-5
grammar,
punctuation or
APA errors.
academic writing
with a sophisticated
presentation of all
material, displaying
clarity, conciseness,
and correctness. The
paper is 2 to 3 pages
in length,
double-spaced, using
Times New Roman,
12 point font. There
are 0-2 grammar,
punctuation or APA
errors.
9