Analysis of Banking Stocks and Project Assessment in Banking and Finance

Running head: BANKING AND FINANCE
Banking and Finance
Name of the Student:
Name of the University:
Author’s Note:

1BANKING AND FINANCE
Executive Summary
The aim of the assignment is to conduct an analysis of the key banking stocks in the banking
industry and the evolution of the share price of companies in the last five years. The influence
of share prices by the recent event held by the Royal Commission of Australia on banks like
AMP, CBA and NAB was taken into analysis. The second part of the assignment deals with
the assessment of an project and the same was evaluated with the help of investment
assessment tools like Net Present Value and Internal Rate of return for assessing the financial
viability of the project.

2BANKING AND FINANCE
Table of Contents
Introduction................................................................................................................................3
Research.....................................................................................................................................3
AMP, CBA and NAB Share Price.........................................................................................3
Share Price Evolution.............................................................................................................6
Analysis......................................................................................................................................7
Capital Budgeting...................................................................................................................7
Required Rate of Return and Internal Rate of Return............................................................7
Net Present Value...................................................................................................................8
Internal Rate of Return...........................................................................................................9
Variable Required Rate of Return........................................................................................10
Recommendations....................................................................................................................10
Conclusion................................................................................................................................11
Reference..................................................................................................................................12
Appendix..................................................................................................................................14

3BANKING AND FINANCE
Introduction
The analysis of the banking industry in contrast to the changes observed in the recent
five years is of great importance. The three major banks of the Australian Banking system
like AMP Bank, Commonwealth Bank and National Australia Bank has played a crucial; role
in the banking industry and the share price of the company has well grown. The share price of
the companies has shown sustainable growth in the last five year but still the banking
companies have seen a direct influence on the share price of the companies and the same
needs to be focused (Vijitha and Nimalathasan 2014). The movement of the share price in
contrast of the recent events where the Royal Commission of Australia investigated the bank
for several claims charged has directly influenced the share price of the banks in the year
2018 and the most affected bank was the AMP bank which almost saw a 30% decline in the
share price of the company (Vogel 2014). There are several risks associated with a company
and the same can be wither in the form of systematic risk that is risk of the company in
contrast to the economy and the other is unsystematic risk which is dependent on the internal
factors of a company. There are various aspects of Capital Budgeting also taken into
consideration for the analysis of the project and the same was evaluated for assessing the
financial viability of a project (Stephen and Okoro 2014).
Research
AMP, CBA and NAB Share Price
The share price analysis was done for all of the major banks in the Australian Banking
industry for evaluating the share price trend shown by each of the Bank during the last five
year of trend period (Ballings et al. 2015). The current share price of AMP Bank is at 2.58
AUD and the share price of the company saw a major movement in the month of October
when the bank was found to be alleged with some charges by the Royal Commission of