Overview: The final project for this course is the creation of a financial analysis and planning report, including a presentation to the executive management team. For Milestone Two, submit a draft of your financial projections (Component 1: Section III).
Project the next three year’s financial statements and free cash flows. Using the projected cash flows, use the cost of capital as a discounting rate to obtain the present value of the firm. Analyze the projections compared to the current market value of the firm.
Prompt: Milestone Two should contain the following sections:
III. Projections: Based on the company’s financial statements, your analysis, and any additional evidence, project the company’s performance for the next three years. Are there any areas of concern? Is the company in good financial shape for moving forward? Discuss a best-case, worst-case, and most likely scenario, including a sustainable growth rate for sales based on existing financial statements and any macroeconomic and financial market conditions that might impact the firm’s strategic objectives. You must thoroughly address the assumptions behind your predictions, supported by spreadsheet calculations. At a minimum, your analysis must cover: A. Weight of equity B. Weight of debt C. Cost of debt D. Cost of equity E. Tax rate F. Value of the company’s stock compared to your forecasted value and free cash flow
Guidelines for Submission: Your draft must contain all of the elements listed above. It should be at least 5 pages in length (excluding the title page, references, supporting calculations, and appendices) and should follow APA guidelines. You must include calculations and appropriate graphs, tables, references, and other appendices as needed to support your written analysis. Cite your sources within the text of your paper and on the reference page.