Corporate Finance Assignment | Financial Analysis Assignment

Running head: CORPORATE FINANCE ANALYSIS
Corporate Finance Analysis
Name of the Student:
Name of the University:
Authors Note:

CORPORATE FINANCE ANALYSIS
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Executive Summary:
The overall viability of the project is mainly detected by using different investment appraisal
techniques such as NPV, IRR, payback period, and discounted payback period. Furthermore,
relevant CAPM model is also used to derive the overall cost of capital, which could be used
in the investment appraisal techniques. The focus is mainly to identify whether the
organisation will be able to generate higher returns in future with the investment opportunity.
Therefore, it could be mentioned that the organisation could commence with the production
of confectioneries, as it might provide higher returns in future. The relevant cash flow
generation, investment appraisal techniques, and sensitivity analysis is used to identify
viability of the project and the return that it could provide under different situation. Hence, it
is advisable for the organisation that start with the production of confectioneries, is it might
help in accumulating higher capital in future.
The main focus of the report is to identify the overall you impact of announcement on
the share price of Riverlea. In addition, the report it also used to identify whether shares of
Riverlea have strong form of market efficiency, which could lead to sudden spike in share
price. After conducting the adequate evaluation and calculation of the share price it could be
identified that Riverlea has strong form of market efficiency, as its prices reacted to the
announcement efficiently. Furthermore, the use of short selling strategy could eventually help
the investors in gaining more income from the overall share price movement of Riverlea.

CORPORATE FINANCE ANALYSIS
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Table of Contents
Part 1:.........................................................................................................................................3
1. Introduction:...........................................................................................................................3
2. Findings:.................................................................................................................................3
2.1 Portraying the calculation for Discounted Rate:..................................................................3
2.2 Deriving the cash flow under normal circumstances:..........................................................5
2.3 Sensitivity Analysis:.............................................................................................................7
2.3.1 Deriving the cash flow when there is 40% probability for 40% lowers incremental
revenues:....................................................................................................................................7
2.3.2 Deriving the cash flow when 10% probability is there for 20% increase in incremental
revenues:....................................................................................................................................9
3. Concussion and Recommendations:....................................................................................11
Part 2:.......................................................................................................................................11
1. Introduction:.........................................................................................................................11
2. Findings:...............................................................................................................................12
2.1 Calculating and determining whether the stock is semi-strong efficiency:.......................12
2.2 Portraying the overall trading strategy:..............................................................................14
3. Concussion and Recommendations:....................................................................................14
Reference and Bibliography:....................................................................................................15

CORPORATE FINANCE ANALYSIS
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Part 1:
1. Introduction:
The evaluation of the assignment is mainly conducted on the overall business
opportunity that is presented to Riverlea for producing confectioneries. The overall viability
of the project is mainly detected by using different investment appraisal techniques such as
NPV, IRR, payback period, and discounted payback period. Furthermore, relevant CAPM
model is also used to derive the overall cost of capital, which could be used in the investment
appraisal techniques. The focus is mainly to identify whether the organisation will be able to
generate higher returns in future with the investment opportunity.
2. Findings:
2.1 Portraying the calculation for Discounted Rate:
The relevant discounting factor is mainly identified by calculating the CAPM returns
with risk free rate of 5.05%, Beta of 1.56, and market return of 9.22%. From the overall
calculation of CAPM relevant cost of capital is derived at 11.55%, which could be used in
detecting viability of the project. Moreover, this relevant detection of cost of capital is mainly
helpful in reducing the negative impact of inflation on returns provided by Investments.