FIN501 Fundamentals of Finance Group Assignment Semester 1 2025 | CSU

Total Weighting: 20% 

Instructions

This assignment needs to be completed in groups (i.e. a minimum of 3 and a maximum of 6 students). If you intend to do it individually, please seek permission from your course lecturer (The idea is to develop soft skills such as teamwork amongst the students). 

The assignment must be completed using Excel only. Your group will submit a single Excel file that includes all relevant details. For example: 

• Tab 1: Group details
• Tabs 2-5: Answers to respective questions 

Some hints are given at the end of the question to guide your group on which formula you will use in Excel for the respective questions. 

The project is due on MOODLE through Turnitin at 11.59 pm on 25th May 2025and the drop box facility will expire accordingly. No further extensions will be provided. 

While similarities in Excel formulas are acceptable, if the course lecturer determines that the explanations are plagiarised between groups, both groups will receive a score of zero. Groups are expected to maintain ethical practices while completing the assignment. 

Marks for each question are provided with the questions 5marks are allocated for presentation, which includes how neatly you present your assignment in Excel. The total marks for the assignment are 50, which will be converted to 20% of your coursework grade. 

If you encounter any difficulties, please review the recorded lecture on the assignment by Mr. Shasnil Chand (Course Coordinator), or you can consult your course lecturer.

Question:1: Time Value of Money (TVM) (10 marks) 

Suppose your group owns a company that considers two investment options. 

• Option 1: An initial investment of $50,000 with expected cash flows of $12,000 per year for the next 5 years.
• Option 2: A one-time lump sum investment of $50,000 that will grow at a rate of 8% per year for the next 5 years. 

Required: 

• Using a discount rate of your preference between 8% to 10%. Calculate the Present Value (PV)and Future Value (FV)for both options. (5 marks)
• Compare both options and provide a recommendation on which option is better based on the calculated results. (5 marks)

(Hint: Use PV and FV formula)

Question 2: Risk and Return Analysis (10 marks) 

Your group is considering a portfolio with two stocks. Considering the weights of the stocks of your preference

• Stock A: 60% of the portfolio
• Stock B: 40% of the portfolio

The expected returns and standard deviations of each stock are: 

• Stock A: Expected Return = 12%, Standard Deviation= 20%
• Stock B: Expected Return = 8%, Standard Deviation = 15%

The correlation coefficient between Stock A and Stock B is 0.5. 

Required:

• Calculate the expected return of the portfolio. (3 marks)
• Calculate the standard deviation (portfolio risk) of the portfolio. (3 marks)
• Explain the relationship between the risk and return in the portfolio and how the correlation between the two stocks affects the overall portfolio risk. (4 marks)

(Hint: Please derive your formula, such as A2*B2, etc..).
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Question 3: Valuation of Bonds (5 marks) 

Suppose your group is considering an investment in buying a bond. The bond has the following characteristics: 

• Face Value: $1000
• Annual Coupon Rate: 6% (paid annually)
• Maturity: 10 years
• Required Rate of Return (Yield to Maturity): 8% 

Required: 

• Calculate the price of the bond using a rate between 8% to 10% of your preference. (2.5 marks)
• Based on your calculations, discuss whether the bond is priced at a premium, at par, or a discount. (2.5 marks) 

(Hint: Use PV formula)

Question 4 Financial Statement Analysis (20 marks)

Use the following link and download the company reports for the years 2017-2023 for the following companies:

Communications (Fiji) Limited (CFL) 
Fiji Television Limited (FTV) 

Required: 

• Calculate the return on assets ratio (ROA) of CFL for the years 2016-2023 (5 marks)
• Calculate the return on assets ratio of FTV for the years 2016-2023 (5 marks)
• Plot both the companies' return on assets ratios on one line graph. (5 marks) 
• Explain the differences between ROA ratios in two companies (5 marks)