FINC6001 Finance: Theory to Applications

Semester 1, 2025

Group Project

Weighting: 100 points (worth 30% of the total unit)

Assessment Due Date: Friday week 10 by 23.59pm

I. INTRODUCTION AND GUIDELINES

The assessment a group assignment, which means that you will work in groups. This project is based on evaluation of equity prices. You are required to analyse the financial statements published by the chosen company listed in a stock exchange. The analysis will be both numerical and written in the form. of a report. The calculations will have errors from the actual market price and your group is to engage generative Al via the "Cogniti" tool to discuss reasons of why there is a price difference. You will be asked to document all correspondence with Cogniti and attach the history of conversation as an appendix. The deliverable is a comprehensive report, blending numerical analysis and critical insights.

The written report should be no more than 3,000 words with normal-sized margins, 1.5 line spacing and size 12 Arial Font. Please number the pages of your report.

All assignments must include a list of references in academic form. using the APA7th method.

The report must be submitted as a .docx document. The Excel spreadsheet must be submitted as a .xlsx workbook. The Excel spreadsheet should contain all the calculations used to generate the values in your report. The Excel spreadsheet will not be explicitly graded but must be submitted at the same time as the report to verify your calculations.

The group representative must submit three files electronically. Failure to submit both files will result in penalties - late penalties will apply until both files are submitted. They also need to ensure that all files submitted can be opened and read in Canvas. Canvas does not allow two files to be submitted simultaneously so please submit the Excel sheet first then make a submission of the engagement history of Cogniti. Finally, submit the report as the last submission.

II.REPORT STRUCTURE

Your report must contain the following information:

1. Financial analysis

2. Equity pricing

3. Historical stock prices

4. Explaining errors in equity pricing

5. Multi-class listings comparison

6. Reflection

7. References

Note: Remember that all calculations conducted in requirements should be provided in excel form. and submitted.

III.TASK OBJECTIVES

Apply theory in practice

Conduct an analysis of different Share Classes

Conduct a stock evaluation

IV. BACKGROUND AND REQUIREMENTS

You are required to complete the followings tasks:

The purpose of this assignment is to conduct a through analysis on the stocks listed by Alphabet Inc. There are three different classes of shares issued by the company as Classes A, B, and C. Two of them (Class A and Class C) are listed and stock prices can be observed from the first stock split in April 2014.

1. Financial Analysis

To conduct an analysis of the two listed classes, you will need to collect financial data from the statement to be able to price the two listed shares. Conduct a comprehensive traditional financial analysis on the company, report on financial ratios and value of equity. The financial statement for fiscal year 2024 is available here(https://abc.xyz/investor/)

2. Equity pricing

In relation to the stock analyses, the group will have to estimate the fair stock value. For this task, the discounted cash flow (DCF) methodology discussed in Module 2 will have to be employed using a 7-years horizon and with a terminal value. In applying the DCF methodology, a table containing the estimated free cash flows (FCFs) will have to be generated and assumptions will need to be made in relation to the company's profitability (ROA) and the growth rate of both (i) assets and (ii) earnings per share (EPS). Document the stock values for the two classes.

Note: In questions 2 and 3 your report needs to contain a critical evaluation, rather than mere description of the calculations.

3. Historical stock prices

As the two shares are offered by the same company which shares the same financialstatement, check how the two shares' price has changed from January 1s, 2015 toDecember 31, 2024. Collect the historical share prices of the two listed classes needfor this section. Discuss differences in the share prices compared to key competitors.Also, identify and discuss historical trends of the difference in the share prices for thetwo classes listed by Alphabet.

4. Explaining errors in equity pricing among the classes

With the financial analyses you have conducted for questions 2 to 4, the group is asked to compare the actual trading prices compared to the fair stock value. There is no deduction in marks for having a difference between your calculation and the actual prices for the two listed shares. In this section you will be asked to discuss with support from Cogniti, what could be the reasons for the pricing error. (note: if you did not have a pricing error, then again, you can discuss with Cogniti on why you did not get errors even though you made assumptions in section 4.)

Save the history of engagement with Cogniti and submit it as a separate MS word document submission. A key aspect of this section is to improve your understanding of pricing of dual class shares while engaging with Gen Al as a tool to assist your understanding.

5. Multi-class listings comparison

Find another company listed on the NYSE or NASDAQ that has multi-class shares. Compare the dual class listings with Alphabet's listings. Discuss how Alphabet's offerings are similar or different to the company you found. Explain potential theoretical reasons for why Alphabets class A (or C) should be higher than class C (A) or whether they should be the same price. Using the price difference in the share price for Class A and Class C Alphabet shares from data in questions 4, discuss whether your theoretical reasoning holds.

6. Reflection

Reflect on the process of using Cogniti as Al-generated advice with your report in sections 1 to 5. Discuss the insights gained, challenges encountered.

7. References

Add a list of references you used for the report. This section is not included in the word count.