An overseas investor has approached your investment advisory firm seeking to invest AUD 120…

An overseas investor has approached your investment advisory firm seeking to invest AUD 120…

An overseas investor has approached your investment advisory firm seeking to invest AUD 120 million in one of the two mining company’s ordinary shares. Your Chief Investment Officer has done some preliminary research on several listed mining companies financial returns and current financial position that has helped her to narrow the choice to two companies.

You have been given the assignment to analyse and prepare a report as to which of the two mining company’s ordinary shares are better value for investment.

Based on your market research (qualitative and quantitative) on NEWCREST MINING LIMITED and ORICA LIMITED, you are required to prepare a recommendation report to the Chief Investment Officer as to the shares of which company provide better value for investment. The overseas investor requires high returns on investment as well as growth in value of shares. The investor is looking to park their funds for long term i.e. 10 years. In your report, include all the calculation and market information on which your recommendation is based.

For this assignment you may use the information provided in the below websites and any other sources you feel will assist you to come up with your recommendation.

Orica Limited http://www.orica.com/
Newcrest Mining Limited http://www.newcrest.com.au/
Australian Stock Exchange http://www.asx.com.au/
Yahoo Finance https://au.finance.yahoo.com/
Reuters http://www.reuters.com/finance/markets

As a minimum calculate the following to help you come up with a recommendation:

• The required rate of return on ordinary shares of the above two mining companies using Capital Asset Pricing Model.

• Ordinary share valuation – Constant dividend growth model.
• Find the monthly holding period return (%) for the period 01 July 2015 to 30 June 2016 for Newcrest Mining Limited and from 01 October 2015 to 30 September 2016 for Orica Limited. The monthly holding period return is the percentage return you would receive if you bought an asset on the first day of the month (opening price) and sold it on the last day of the month (closing price). Graph your results on one graph with returns on the y axis and time on the x axis. (Use ‘Close’ rather than ‘Adjusted Close’ for the selling price and ignore any dividends.

Guidelines:

  • Base your calculation on the most recent financial results i.e. 30/06/2016 for Newcrest Mining and 30/09/2016 for Orica Limited.
  • Show all your calculation on the annexure.
  • Limit your recommendation report to the Chief Investment Officer between to 300 to 400 words using financials theories and concepts. (9 marks)

An overseas investor has approached your investment advisory firm seeking to invest AUD 120…

TALK TO SUPPORT VIA LIVE CHAT TO SEE THIS ANSWER AT $ 10 ONLY