Stock Valuation)
and EVA/MVA Analysis
Students may elect to use the eVal Financial Forecasting
Model or Prof. Stevens’ Excel Discounted Free Cash Flow Valuation Model for the
DCF Stock Valuation part of this assignment. If the eVal model is selected,
make sure that financial information is available for the company that is
selected for the assignment (See: http://www.lundholmandandsloan.com).
Similarly, if Prof. Stevens’ model is used for the assignment make sure that
financial information is available (e.g., Yahoo Finance, etc.). (Note: Alternatively,
the ValuePro.net model may be used for the DCF valuation but the final score
for the assignment will be reduced by 20% if that alternative is selected.)
The actual Excel forecasting model (either eVal or Prof.
Stevens’ model) must be submitted with the assignment.
The instructor’s EVA/MVA Excel Model must be used for the
EVA/MVA analysis. That model must be submitted with the assignment, too.
Assignment: DCF Valuation and EVA/MVA Analysis
Using the company that was selected for the class, there are
two parts to this assignment:
1. DCF Company Valuation –
Prepare a DCF Valuation of the selected company using
either: (a) the eVal Excel Model and the projections developed in Week 2, or,
(b) Professor Stevens’ Excel Financial Forecasting Model.Both of the models
have an embedded worksheet that accommodates the Discounted Free Cash Flow
stock valuation.
Make sure that the stock valuation model is submitted with
the written analysis.
Discuss, interpret and explain the assumptions (variables)
used in the analysis.
Discuss, interpret and explain the results of the analysis.
This involves comparing the intrinsic value of the company’s stock valuation to
the current stock price and carefully explaining any differences.
2. EVA & MVA Analysis –
Prepare an analysis of EVA and MVA for the selected company.
An Excel model is provided by the instructor. Explain the results.
Make sure that the EVA/MVA Excel model is submitted with the
written analysis.
CONTENT OF THE ANALYSIS
The analysis associated with the two parts of the assignment
needs to include:
1. Explanation of the Variables Used in the DCF Valuation –
Explain and justify all of the variables used in the DCF valuation. These would
include, but are not limited to, the growth rates, capitalization structure,
cost of capital components, WACC, etc.
2. Explanation and Interpretation of DCF Valuation Results –
Explain the results of the DCF analysis. This should include an analysis of any
difference between the results of the DCF analysis and the current stock price.
3. Explanation of the Data Used for the EVA Analysis and
Interpretation of Results– Present the results of the EVA analysis and explain
what they mean. The analysis should discuss future EVA results and what
variables can affect those results either positively or negatively.
4. Explanation of the Data Used for the MVA Analysis and
Interpretation of Results- Present the results of the MVA analysis and explain
what they mean. The analysis should explain a discussion of future MVA results
and what variables can affect those results either positively or negatively.
Writing Instructions
The discussion portion of the analysis should be three to
five pages in length, double spaced, and should employ APA style and format for
reference citations. Supporting data (e.g., figures, tables, etc.) and
references should be submitted limited to four separate attachments in an
appendix after the written portion of the paper.
The paper should begin with a short introduction and then
proceed to examine the four topics outlined in the previous section.
The subheadings used in the paper should be:
1.Introduction
2. Explanation of the Variables Used in the DCF Valuation
3. Explanation and Interpretation of DCF Valuation Results
(Including comparison and explanation of differences between
the current stock price and results of the DCF valuation.)
4. Explanation of the Data Used for the EVA Analysis and
Interpretation of Results
5. Explanation of the Data Used for the MVA Analysis and
Interpretation of Results
Evaluation:12.5% of final course grade.
Completeness of analysis:The analysis must demonstrate a
solid understanding of discounted free cash flow stock valuation and EVA/MVA
analysis. All assumptions used in preparing the projections for the project
need to be presented and thoroughly explained.
Organization:The papershould be well-organized and follow a
logical pattern of analysis and discussion.
Presentation:Papers should meet professional business
standards and meet APA formatting requirements.
Spelling, punctuation, and grammar:There should be few
errors in grammar and punctuation. All sentences must be complete and
well-structured.
Submission and Format:The completed paper is to be submitted
to the “Gradebook” location designated for the assignment. The paper must be in
Word format otherwise no credit is earned for the assignment.
The paper is also to be submitted to the Online Classroom.
This will allow students to examine and discuss the various projects.
GRADING RUBRIC FOR DCF & MVA-EVA ANALYSIS
Student:
Description of Evaluation
Failing, undeserving of credit
Passing, but below standard
Satisfactory, meets essential requirements
Superior Work and clearly above average
Work of Distinction
Related Grade
F
D-, D, D+
C-, C, C+
B-, B, B+
A-, A, A+
Category
Required Topics
1. Introduction – Provide a brief overview of the assignment
and include a preview of the contents of the report.
Introduction is not presented or undeserving of credit.
Only a superficial effort to develop the introduction.
Satisfactory presentation of the introduction.
Superior presentation of the introduction and clearly above
average.
Distinctive and very thorough presentation of this first
section.
2. Explanation of the Variables Used in the DCF Valuation –
Explain and justify all of the variables used in the DCF valuation. These would
include, but are not limited to, the growth rates, capitalization structure,
cost of capital components, WACC, etc.
Virtually no effort to explain the variables used in the DCF
valuation analysis; or, section not completed.
Marginally passing development and presentation of the
description of the variables used in the DCF analysis. May be some significant
weaknesses in the overall description and related financial data.
Satisfactory development and presentation of the description
of the variables used in the DCF valuation analysis.
Superior development and presentation of the description of
the variables used in the DCF valuation analysis. The analysis is
understandable and the cash flows seem to be relatively realistic.
Distinctive development and presentation of the description
of the variables used in the DCF analysis. The assumptions and the cash flows
are clear, realistic, and understandable.
3. Explanation and Interpretation of DCF Valuation Results–
Explain the results of the DCF analysis. This should include an analysis of any
difference between the results of the DCF analysis and the current stock price.
Virtually no effort to examine and explain the results of
the analysis; or, section not completed.
Passing effort to examine the results of the analysis. May
be some errors or inconsistencies with the explanation and interpretation of
the results.
Satisfactory effort to examine the results of the analysis.
May be some minor errors or inconsistencies.
Superior and reasonably comprehensive effort to explain and
interpret the results of the valuation analysis.
Distinctive and comprehensive effort to explain and interpret
the results of the valuation analysis. The analysis is careful, comprehensive,
detailed, and consistent.
4. Explanation of the Data Used for the EVA and
Interpretation of Results – Present the results of the EVA analysis and explain
what they mean. The analysis should discuss future EVA results and what
variables can affect those results either positively or negatively.
Virtually no effort to explain the data used in the EVA
valuation analysis or to interpret the results; or, section not completed.
Marginally passing development and presentation of the data
used in the EVA analysis and interpretation of the results. May be some
significant weaknesses in the overall description and interpretation of the
financial data and results.
Satisfactory development and presentation of the data used
in the EVA analysis and interpretation of the results. May be some weaknesses
in the description of the data and interpretation of the results.
Superior development and presentation of the description of
the data used in the EVA analysis and interpretation of the results. The
analysis is understandable and the results seem to be relatively realistic.
Distinctive development and presentation of the description
of the data used in the EVA analysis and interpretation of the results. The
assumptions and results are clear, realistic, and understandable.
5. Explanation of the Data Used for the MVA Analysis and
Interpretation of Results – Present the results of the MVA analysis and explain
what they mean. The analysis should discuss future MVA results and what
variables can affect those results either positively or negatively.
Virtually no effort to explain the data used in the MVA
valuation analysis or to interpret the results; or, section not completed.
Marginally passing development and presentation of the data
used in the MVA analysis and interpretation of the results. May be some
significant weaknesses in the overall description and interpretation of the
financial data and results.
Satisfactory development and presentation of the data used
in the MVA analysis and interpretation of the results. May be some weaknesses
in the description of the data and interpretation of the results.
Superior development and presentation of the description of
the data used in the MVA analysis and interpretation of the results. The
analysis is understandable and the results seem to be relatively realistic.
Distinctive development and presentation of the description
of the data used in the MVA analysis and interpretation of the results. The
assumptions and results are clear, realistic, and understandable.
6. Writing, Grammar, Spelling, & Presentation- Logical
and Smooth Flowing Transitions and Relationships Among Sections of the Written
Report. Avoidance of Personal Pronouns; Avoidance of Referring to Company as
They, Their, or Them; etc. Appropriate use of reference citations.
Paper is poorly written and presented; not worthy of a
passing evaluation. May have failed to use appropriate subheadings for the
assignment.
Passing written presentation; may have major weaknesses.
Satisfactorily written presentation with some weaknesses.
Superior written presentation with very limited minor
weaknesses, omissions, etc.
Distinctively written presentation with no obvious weak
