Corporate Finance Assignment Solution - FIN201, Semester 1

This document presents a comprehensive solution to a FIN201 Corporate Finance assignment, addressing key concepts in investment analysis and portfolio management. The solution includes detailed calculations for Net Present Value (NPV) based on a given cost of capital and project lifespan. It also provides an analysis of a portfolio, calculating the expected return and beta. The assignment further assesses the systematic risk of the portfolio compared to an average asset. The document references relevant academic sources, demonstrating a strong understanding of corporate finance principles and providing a practical application of financial concepts. The portfolio's performance is also assessed against a benchmark, showing a strong understanding of the subject. The provided solution offers a valuable resource for students seeking to understand and excel in corporate finance.

Running head: FINANCE
FINANCE
Name of the student:
Name of the university:
Author Note:

1FINANCE
Table of Contents
In Response to Question 1..........................................................................................................2
In Response to Question 2..........................................................................................................2
Part A.....................................................................................................................................2
Part B......................................................................................................................................3
References..................................................................................................................................4

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In Response to Question 1
Formula
The process of calculating the net present value of the company is by summing up all
the present value of cash flow up to the 5th year.
Discount Factor (DF) = [(1 + (i/n)]-n*t
Where,
I = Rate of Interest
T = Time
In Response to Question 2
Part A

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Formula:
The beta of the portfolio is calculated is calculated by utilizing the excel formula of
SLOPE by taking the column of expected return and beta.
The expected return for the three shares have been evaluated based on the amount
invested which is 240, 480 and 450 respectively for share 1, 2 and 3. The overall beta or risk
of the portfolio is 0.23. Overall the company has less systematic risk compared to the average
asset investment (Chetty, Sándor and Szeidl 2017).
Part B
The portfolio has outperformed the benchmark provided by the S&P and hence is a
good condition as per the given information (Chandra 2017).

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References
Chandra, P., 2017. Investment analysis and portfolio management. McGraw-Hill Education.
Chetty, R., Sándor, L. and Szeidl, A., 2017. The effect of housing on portfolio choice. The
Journal of Finance, 72(3), pp.1171-1212.