The final project will be a Financial Analysis Report in which you will examine historical data to gain information about the current and future financial health of United Parcel Service (“UPS”). You

FIN 5 5 0 Final P roject Guide lin es and Rubr ic O vervi ew Financial ana lysis i nvolves examining historical data to gain information about the cu rrent and futu re financial health of a company. F inancial ana lysis can be app lied in a wide variety of situ ations to give business managers the information they ne ed to make critical decisi ons. The ability to understand financial d ata is ess ential for a ny business manager. The final project for this cou rse is the creation of a finan cial ana lysis repo rt. For this asse ssment, you will provide a fi nancial ana lysis rep ort for United Parcel Service (UPS) based on the data in the 2017 UPS Annual Report provided. You will be asked to take the topics that you have covered th rough out the course and dis play your mathematical a nd conceptual mastery of them. You will condu ct back groun d calcu lations and provide managerial a nalysis for t he followi ng topics: time value of mo ney, stock valuation, bond valuation, and capital bud geting . The project is d ivided i nto fou r milestone s, which will be su bmitted at various p oints through out the course to scaffold lear ning and ensure qu ality final su bmissions. These mile ston es will be su bmitted in Modu les Two, Fou r, Six, and Seven . The final project sub missi on will be in Modu le Ni ne . In this assi gnm ent, you will de monstrate your mastery of the following course outcomes:  Pred ict the effects of the time value of mo ney on potential i nvestments for ens uring an effec tive portfolio ba lance betwe en risk and return  Assess the stock valuation process as a viable fi nancing and investment option for maximizing sha reholder value  Assess the bond issu an ce process for its viability as a financing option for rais ing adeq uate capital  Forecast the feasi bility of corporate investment opp ortunities by utilizing capital bud geting estimates for ensu ring effec tive decis ion maki ng  Analyze macroecono mic variab les that impact corporate financial d ecisi on making for ensu ring ali gnment with strategic objec tives Prom pt Usi ng the 2017 UPS Annual Report , prepare a fi nancial ana lysis report for UPS . For your calc ulations, use the Final Project Excel Workbook which i nclud es tabs specif ic to each mile stone. Be su re to inc lud e in your analysis t he backg roun d calculations and managerial a nalysis for each of the following topics: time value of mo ney, stock and bond valuation, and capital bud geting. A lso , inc lud e a disc ussi on of macroeconomic variables that might impact the com pany’s fi nancial decisi on maki ng and strategic objecti ves. N ote that while these elements may seem sepa rate and unrelated, together they will present a well-round ed view of the company’s finances wi th regard to the topics. Specifi cally, you must add ress the critica l eleme nts listed be low. Most of the critical el ements ali gn with a partic ular course outcome (shown in brackets). I. Time Va lue of M one y A. Using the Final Project Excel Workbook , calc ulate the following time value of mo ney figures: 1. Calculate the present value of the company based on the given interest rate and provided Fee Cash Flows for the years 2015, 2016, and 2017. 2. Suppose the risk of the company changes based on an unanticipated decrease in the Free Cash Flows by 10% annually during the years 2015, 2016, and 2017. Recalculate the present value of the company. 3. Suppose that a potential buyer has offered to buy this company in three years. Based on the initial present value you calcula ted above in A1, what wou ld be a reasonable amount for the buyer to pay for the company in three years’ time? B. What are the implication s of the chang e in present value based on ris k? In other words, what does the change mean to the company, and how would yo u, as a financial manager, interpret it? Be su re to justi fy your rea soning with appropriate references/sources . C. Based on the present value of the com pany that you calculated, and being mind ful of the n eed to effec tively balan ce portfolio risk with retur n, what r ecom men dation wou ld yo u make about pu rchasing the company as an i nv estment at that pric e? Be sure to su bstanti ate yo ur reasoning with appropriate references/sources . II. Stock Va lua tion A. Based on the figu res provided, calculate each of the followin g: 1. The new dividend yield if the company increa sed its divi dend per sha re by 1.75 2. The dividend yield if the firm doub led its outstan ding shares 3. The rate of return on eq uity (i.e., the cost of s tock) based on the n ew dividend yield you cal culated a bov e B. What effect would you expect each of the calc ulat ions yo u perf ormed to have in terms of sha reho lde r value? In other words, su pp ose the company’s goal is to max imize sh areh older value. H ow will each of the situ ations su pp ort or inh ibit that goal? Be sure to justify your reasoning . C. To wh at extent do you feel the company’s dividen d policies su pport or hind er their strategi es? For example, if the company is atte mpting to grow, are they retaining and reinvesting their ear ning s rather than distribu ting them to investors throug h dividen ds? Be sure to su bstantiate your clai ms. III. Bon d Issuan ce A. Ass uming this company already has bond s outstand ing , calc ulate the followin g: 1. The new value of the bond if overall r ates in the market incr eased by 5% 2. The new value of the bond if overall r ates in the market dec reas ed by 5% 3. The value of the bond if ov erall ra tes in the mark et stay ed exac tly the same B. What effect would you expect each of the calc ulat ions yo u perf ormed to have in terms of the company’s de cision to raise cap ital in this mann er? In other words, for each situati on, would you consider bond valuation to be a viable option for incr easi ng capital? Be su re to justify yo ur rea soning . C. To what extent do you f eel the com pany’s bon d issuance policies su pport or hind er their stra tegies? For example, if the company is attem pting to fund operating expen ses, refinance old de bt, or ch ang e its capital stru cture, a re they issu ing suff icient b ond s to ach ieve these goals? Be sure to su bstantiate your cla ims. IV. Cap ital Bud geting Data A. Supp ose the com pany is con sideri ng a po tential investm en t project to add to its portfolio. Ca lcu late the following items: 1.The net prese nt value (NPV) of the p roject 2.The internal rate of return (IRR) of the project B. What are the implications of these calc ulat ions? In other words, ba sed on each of the calc ulat ions, and be ing mind ful of the need to balan ce portfolio risk with r eturn, would yo u recomm end that the company pu rsue the investm ent ? Why or why not? Be sure to su bstantia te yo ur clai ms. C. What is the differen ce between NPV a nd IRR? Wh ich one would yo u ch oose for evaluati ng a potential i nvestment and why? Be su re to su pp ort yo ur rea soning with evidence. V. Ma croecono mic Item s: The CEO of the company is con vinced that financial ana lysis sho uld hing e only on what is h app en ing inter nally within the company. Convince him otherwise b ased on the followin g: A. Analyze the implication s of interest rate ch ang es on any of the calc ulat ions you perf ormed. Be sure to substantiate yo ur cla ims. B. E x p l a i n how an issue ( negat ive or posit ive) within the overall stock mark et migh t impact the com pany’s stock valuation n umbers, other fi nancial variables, or its overall portfolio management? Be su re your r esponse is su pported by eviden ce. C. Analyze the impact of any externa l factor (i.e., extern al to the company) disc ussed thr ough out the course on the company’s fi nancial posit ion. Be su re to justi fy your rea soning . Mil est ones Milestone One : Time Value of Mo ney (Secti on I) In Modu le Two, you will s ubmit a draft of the Time Value of Money sec tion of the final projec t, a long with you r su pp orting exp lanations. Sub mit your calc ulations on the desi gn ated tab of the Final Project Stu dent Workb ook and your su pporting exp lanations as a Microsoft Word docu ment. This milestone will be graded with the Mileston e One Rubric. Milestone Two: Stock Valuation an d Bo nd Issuan ce (Secti ons II and III) In Modu le Fou r, you will s ubmit a draft of the Stock Valuation and Bond Issu an ce sections of the final project, al ong with your su pporti ng exp lanations. Submit your calcu lations on the d esign ated tab of the Final Project Stud ent Workb ook and your su pporting exp lanations as a Microsoft Word docume nt. This mile stone will be graded with the Mile ston e Two Ru bric. Milestone Th ree: Cap ital Budg eting Data ( Secti on IV) In Modu le Six, you will su bmit a draft of the Capital Bud geting Data se ction of the final project, along with your su pp orti ng exp lanations. Submit your calc ulations on the desi gn ated tab of the Fi nal Project Stud ent Workb ook and your su pp orting exp lanations as a Microsoft Word document. This mile stone will be graded with the Mileston e Three Ru bric. Milestone Four: Macroe conomic Items (Secti on V) In Modu le Seven , you will sub mit a draft of the Macroeconom ic Items section of the fin al p roject, along with your su pporting exp lanations. Submit your calc ulations on the desi gn ated tab of the Fi nal Project Stud ent Workb ook and your su pp orting exp lanations as a Microsoft Word document. This mile stone will be graded with the Mileston e Fou r Ru bric. Final Project Sub mission: Finan cial A na lysis Rep ort In Modu le Ni ne, you will s ubmit your finan cial ana lysis repo rt along with your completed F inal Project Student Workb ook. It s hould be a complete, p olished arti fact containing all of the criti cal elements of the final projec t. It should refle ct the in corporation of feedback gained th rough out the course. T his su bmission will be graded with the Final Project Rub ric. De liverables Mileston e Del ive rab le Modu le Due Grad ing One Time Value of Money (Sec tion I) Two Graded s eparately; Mileston e One Ru bric Two Stock Valuation and Bond Issu an ce (Sections II a nd III) Four Graded s eparately; Mileston e Two Rub ric Th ree Ca pital B ud geting Data (Se ction IV) Six Graded s eparately; Mileston e Th ree Ru bric Four Macroeconom ic Items (Se ction V) Se ven Graded s eparately; Mileston e Four Ru bric Final Project Submission: Financial A nalysis Report Nine Graded s eparately; Final Project Ru bric Final Project Rubric Guide lines for Sub mission : Your financial ana lysis report should be 7 to 12 pa ges, n ot includ ing a title pa ge and references pa ge. It shou ld use 12-point Times New Roman font, doub le spaci ng, and one-inch margins. A ll ci tations and references should be formatted a ccording to APA style. A lso sub mit your completed Final Project Stud ent Workboo k. Critical Elements Exemp lary Proficient Nee ds Imp rovement No t Evident Value Time Value of Mon ey: Figures [FIN-550 -01] Acc urately calc ulates reque sted figu res (100%) Calcul ates fig ures, bu t with gaps in accu racy or detail (70% ) Does not calc ulate figures (0%) 6.33 Time Value of Mon ey: Imp licatio ns [FIN-550 -01] Meets “Proficien t” crit eria and dem onstrat es keen insight into the interrelationship between risk and presen t value (100 %) Analyzes implications of change in presen t value based on risk, justifyi ng reasoning (90%) Analyzes implications of change in presen t value based on risk, but response or reaso ning is cursory or illogi cal (70%) Does not analyze impl ications of change in presen t value based on risk (0%) 6.33 Time Value of Mon ey: Value [FIN-550 -01] Meets “Proficien t” crit eria and dem onstrat es keen insight into using time value of money for recomm end ing investmen ts (100%) Ma kes recommend ation ab out pu rchasing the company, substantiating cla ims (90%) Ma kes recommend ation ab out pu rchasing company, bu t response or sub stanti ation is cursory or illogi cal (70 %) Does not make recomme nd ation about pu rchasing company (0%) 6.33 Stock Valuation : Calculation s [FIN-550 -02] Acc urately calc ulates reque sted figu res (100%) Calcul ates fig ures, bu t with gaps in accu racy or detail (70% ) Does not calc ulate figures (0%) 6.33 Stock Valuation : Shareho lder Value [FIN-550 -02] Meets “Proficien t” crit eria and dem onstrat es keen insight into t he effects of changing financial varia bles on shareholder value (100%) Analyzes the effects of each calc ulation on shareholder value, justifyi ng reasoning (90%) Analyzes the effects of each calc ulation on shareholder value, bu t response or reasoning is cursory or illogi cal (70%) Does not analyze the effects of each calc ulation on shareholder value (0%) 6.33 Stock Valuation : Dividend Policies [FIN-550 -02] Meets “Proficien t” crit eria and dem onstrat es keen insight into t he relation ship betw een dividend polici es an d strategies for increasing shareholder value (100%) Assesses the exten t to which dividend polici es supp ort or hind er company strategies, justifyi ng reasoning (90%) Assesses the exten t to which dividend polici es supp ort or hind er company strategies, but response or reaso ning is cursory or illogi cal (70%) Does not assess the exten t to which dividend polic ies supp ort or hind er company strategies (0%) 6.33 Bon d Iss uance: Bond s [FIN-550 -03] Acc urately calc ulates reque sted figu res (100%) Calc ulates fig ures, bu t with gaps in accu racy or detail (70% ) Does not calc ulate figures (0%) 6.33 Bon d Iss uance: Ra ising Ca pital [FIN-550 -03] Meets “Proficien t” crit eria and dem onstrat es keen insight into the effects of changing market cond itions on decisions to raise capital (100%) Analyzes the effects of each calc ulation on the company’s decision to raise capital, justifying reaso ning (90%) Analyzes the effects of each calc ulation on the company’s decision to raise capital, bu t response or reasoning is cursory or illogi cal (70%) Does not analyze the effects of each calc ulation on the company’s decision to raise capital (0%) 6.33 Bon d Iss uance: Bon d Issuance Policies [FIN-550 -03] Meets “Proficien t” crit eria and dem onstrat es keen insight into the relation ship betw een bond issuance polici es an d strategies for raising capital (100%) Assesses the exten t to which bond issuance polici es supp ort or hind er company strategies, justifyi ng reasoning (90%) Assesses the exten t to which bond issuance polici es supp ort or hind er company strategies, but response or reaso ning is cursory or illogi cal (70%) Does not assess the exten t to which bond issuance polic ies suppo rt or hind er company strateg ies (0%) 6.33 Ca pital Bud geting Da ta: Potential Investment [FIN-550 -04] Acc urately calc ulates reque sted figu res (100%) Calcul ates fig ures, bu t with gaps in accu racy or detail (70% ) Does not calc ulate figures (0%) 6.33 Ca pital Bud geting Da ta: Pu rsuing the Investment [FIN-550 -04] Meets “Proficien t” crit eria and dem onstrat es keen insight into using NPV and IRR to jud ge poten tial investmen t o pp ort un ities (100%) Analyzes the implications of each calc ulation on the recomm end ation to pu rsue the investmen t, sub stantiating claims (90%) Analyzes the implications of each calc ulation on the recomm end ation to pu rsue the investmen t, bu t response or sub stanti ation is cursory or illogi cal (70 %) Does not analyze the imp lications of each calc ulation on the recomm end ation to pu rsue the investmen t (0%) 6.33 Ca pital Bud geting Da ta: Difference [FIN-550 -04] Meets “Proficien t” crit eria and dem onstrat es keen insight into using NPV and IRR to jud ge poten tial investmen t o pp ort un ities (100%) Acc urately characterizes the difference between NPV and IRR and explains which would be chosen for evaluating a potential investmen t and why, support ing reaso ning with evidence (90% ) Ch aracterizes the difference between NPV and IRR an d explains which would be chosen for evaluating a poten tial investmen t and why, bu t response is cursory or inacc urate or evidence is not supp orti ve (70%) Does not characterize the difference between NPV and IRR and does not explain which would be chosen for evaluating a poten tial investmen t and why (0%) 6.33 Macroeconom ic Items: Imp licatio ns [FIN-550 -05] Meets “Proficien t” criteria and dem onstrat es keen insight into t he relation ship betw een interest rate changes an d financial varia bles in a company (100%) Analyzes implications of interest rate changes, substantiating clai ms (90%) Analyzes implications of interest rate changes, bu t response or sub stanti ation is cursory or illogi cal (70 %) Does not analyze impl ications of interest rate changes (0%) 6.33 Macroeconom ic Items: Stock Market [FIN-550 -05] Meets “Proficien t” crit eria and dem onstrat es keen insight into t he relation ship betw een stock market fluctuation s an d financial varia bles in a company (100%) Assesses the impact of an issue within the overall stock market on the company’s stock valuation nu mbers or any other financial varia ble, supp orti ng response with evidence (90%) Assesses the impact of an issue within the overall stock market on the company’s stock valuation nu mbers or any other financial varia ble, bu t response is cursory, illogi cal, or weakly supp orted (70%) Does not assess the impact of an issue wit hin the overall stock market on the company’s stock valuation nu mbers or any other financial varia ble (0%) 6.33 Macroeconom ic Items: External Factor [FIN-550 -05] Meets “Proficien t” crit eria and dem onstrat es keen insight into the relation ship betw een external factors an d a company’s fina ncial position (100%) Analyzes the impact of a factor external to the company on the company’s fina ncial position , justifyi ng reasoning (90%) Analyzes the impact of a factor external to the company on the company’s fina ncial positio n, bu t response is cursory, illogi cal, or weakly supp orted (70%) Does not analyze the impact of a factor external to the company on the company’s fina ncial position (0%) 6.33 Artic ulation of Respon se Submission is free of errors related to citation s, grammar, spelling, syntax, an d organization a nd is presen ted in a professional a nd easy to read format (100%) Submission has no ma jor errors related to citation s, grammar, spellin g, syntax, or organization (90%) Submission has major errors related to ci tation s, grammar, spelling, syntax, or organization that negatively impact readability and artic ulation of main ideas (70%) Submission has crit ical errors related to citation s, grammar, spelling, syntax, or organization that preven t und erstand ing of ideas (0%) 5.05 Earned Total 100%