Financial Management Assignment Aguia and Pomba paper writing service

Aguia and Pomba are two companies operating in the same industry. They have the same business and operating characteristics.  Aguia is financed with debt and equity whereas Pomba is an all equity company.

 

Aguia currently earns three times as much profit before interest and tax as pomba. It is company policy of both companies to pay 100% of earnings each year as dividend.

 

The Market Value of each Company is Currently

Aguia                                     Pomba

£                                              £

Equity (20 million shares)              72                                            30

Debt £12 million of 12%

Loan Stock                                        28*

——                                         ——-

• 30

——                                         ——–

• Note market value of debt

Aguia earns a regular profit before interest and tax of £6 million and Pomba earns £2 million. Both companies pay corporation tax at 35%

Aguia’s shares are currently trading in the market at £8.00

 

 

• Apply the M&M formula to establish what you think the share should be the correct equilibrium price of Aguia’s shares? (10 marks)

 

• If the shares of both companies traded in a perfect market what should a rational investor do and what should happen to the share price of both companies? (10 marks)

 

• Why are capital structure decisions often referred to as ‘ the Capital Puzzle’?

(20 marks)

 

 

Note Your answer to question two should be 1,000 words and question three should be at least 2,000 words. There is no word count for question one as it is mainly calculations.

 

 

 

The Assessment

Assessment is not just about ‘grading’ your performance but an integral and important part of your learning. Preparation for assessment, undertaking the set tasks and using the feedback provided helps you to develop and demonstrate skills as well as being able to evidence your knowledge and understanding. The assessment criteria are included as an appendix.

Assessment task

Your assessment task is to investigate the issues surrounding the question and to present your findings.

 

Following the research you are required to write and submit an individual report. The report will provide an individual analysis of the problem or issue and appropriate or current actions necessary to deal with it.

Individual report

In addition to the above, the individual report will focus on the following:

• A comparative analysis using the data and information you have gathered.
• A sound conclusion based on the evidence you have presented.

 

Presentation of Findings

Individual report

Students are required to write a Report (3000 words) ON A STRICTLY INDIVIDUAL BASIS. This means no copying from other students or published sources. The individual report will focus on the following:

• A comprehensive comparative analysis using the data and information you have gathered.
• A review of the relevant literature
• A sound conclusion based on the evidence you have presented.

Written Presentations

There word limit for the individual written report is 3,000 words (plus or minus 10%). However, you may include any additional, relevant material in the appendix – which is not included in your word count.

 

It is important to present your work correctly and learning to do so at an early stage, by consulting these guidelines, may save you time and trouble in the long run.

 

The report should be written according to the highest standards of English usage. The Oxford English Dictionary is recommended as the ultimate authority. Avoid the use of the first person in the main report. Conciseness of expression is expected and sentences should be constructed in order neither to be too long and convoluted, nor e-mail or texting style. Remember that quality is more important than quantity. Clarity is increased by adopting a logical order of presentation (especially regarding paragraphs or section headings).

 

Although spell checks are invaluable for detecting typing errors and the odd spelling mistake, they are no substitute in the end for careful proof reading. You cannot rely on a spell check which will not, for example, pick up mistakes which sometimes may be related to grammar (such as their/there) when these are in fact quite different words in the dictionary.

 

Careful editing is essential and it is sometimes difficult to detect mistakes in your own work with which you are familiar. You are strongly advised to persuade a friend or colleague to read through your work in its final form. It is not the task of your tutor to do this for you.

 

Numbers below one hundred in the main text are usually spelt out in full (e.g., sixty-five), as well as those which can be expressed in two words (three million); but 2,760 specimens, 516 students. Numerals should be used for dates (consecutive years should appear as 1992-93, not 1992-3 or 1992/93), street numbers, decimals, exact sums of money and percentages (with ‘per cent’ spelt out rather than %). Uniformity is important; mixtures of words and numbers should always be avoided.

 

A suggested (but not mandatory) structure could look like this:

 

Title Page

List of Contents

List of Tables, Illustrations and/or accompanying materials

Question One

Question Two

Question Three

References

Appendices

 

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