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MPFQ753 – Finance – Trimester 2 2022
Assessment Task 2 – Group Assignment
DUE DATE AND TIME:
PERCENTAGE OF FINAL GRADE:
WORD COUNT:
Sunday 4 September 2022, 11.59pm
30%
2500 words max. (excluding tables, figures, and references)
Assessment Task 2 Description:
Case study – Dividend Discount Model
The dividend discount model is a well-known model for pricing equity shares using the time value of
money concept whereby the current fair price of a share is evaluated as the present value of future
expected dividends. In a relatively simple version of this model, it is assumed that the annual growth
rate of dividends is constant, and the current fair price of a share is obtained as next period’s dividend
divided by the difference between the expected annual return on equity and the constant annual
growth rate of dividends. When the current price of a share is already known (e.g., by looking up the
publicly available market information on the share prices), the constant dividend growth model (also
called the Gordon’s model) can be inverted to derive the annual return expected by the equityholders of a certain share. This is the methodology sometimes used to estimate the cost of equity
capital for a firm.
For your MPF753 assessment 2 in T2 2022, you are required to apply Gordon’s model to estimate
the cost of equity capital of a firm using real data drawn from a financial database.
a) Choose three of the following six Australian listed companies:
• Telstra
• Commonwealth Bank of Australia (CBA)
• CSL
• Wesfarmers
• Aristocrat Leisure
• AGL Energy
Access Morningstar Datanalysis Premium via the Deakin library (refer to the Assignment 2
instructions document). Download onto a spreadsheet the last fifteen years (01/07/2007 to
30/06/2022) of dividend payments history for each of your three chosen companies.
(2 marks)
b) All interim dividends must be appropriately annualized before adding up with the year-end final
dividends in order to determine the true dollar value of yearly dividends received by the
shareholders. For companies that have paid interim dividends, assume that those dividends were
paid at the end of the first half of the year and therefore earn six months of interest at a risk-free
rate for the next half. The current Australian Government 15-year bonds rate is 3.873% p.a. (data
accessed on 1st of July 2022)
(3 marks)
c) After determining the dollar dividends received by shareholders for each of the past fifteen years,
compute and justify a proxy annual constant growth rate of dividends to be used in Gordon’s
model. Use your computed proxy annual constant growth rate to predict next year’s dollar
dividend value.
(5 marks)
d) In the Morningstar Datanalysis Premium Database, look up the closing price of each of your three
chosen stocks as on 30/06/2022. Use Gordon’s model to solve for the expected return on equity
for each of the stocks. Do these expected return figures appear justified given the nature of the
business, the overall current market conditions, and the industrial sectors within which each of
your chosen companies operate? Explain.
(8 marks)
e) What do you feel are the most serious methodological problems associated with Gordon’s model?
Outline your argument and carry out a review of relevant financial academic literature and
identify at least two alternative cost of equity estimation methods (for example, CAPM, FamaFrench three-factor model and Carhart four-factor model, etc.). Can these identified methods be
better than Gordon’s model? Argue your case. You must properly reference all sources of
information used and provide the name of the referencing style in the report. (Maximum 1300
words for part (e)).
(12 marks)
(*Total = 2 + 3 + 5 + 8 + 12 = 30 marks)
Carefully read the separately posted Assignment 2 instructions document before proceeding.
_________________________________________________________________________________
Useful resources and referencing
You should read and understand Chapters 7, 9 and 15 of your textbook and Topics 4 and 5 seminar
slides. You are expected to do research outside of your seminar time, using library/online sources,
process the information gathered, and write an organised, well-thought-out response to the
assignment questions.
The relevant financial information for this assessment task (such as dividends, industry sector
information, share price etc.) should be obtained from Morningstar DatAnalysis Premium – a library
database that is accessible via the Deakin Library website. The instructions on how to obtain the
information from DatAnalysis are given in a separate instruction document on Moodle. In your
report, embed the Excel spreadsheet containing the data and calculations for your assignment.
Good referencing and carefully checking all your references are important. Make sure you leave
enough time to do this. For this assignment, you are recommended to use the Harvard referencing
style, as set out in the Deakin guide to referencing – Harvard, and include a comprehensive list of
references for both your data sources and in-text citations. The Deakin guide to referencing website
also provides useful information on academic integrity, general referencing principles and how to
integrate your sources into your writing through summarising, paraphrasing, etc. You must provide
the name of the referencing style in the report.
Learning Outcomes
This task allows you to demonstrate achievement towards the unit learning outcomes. The ULOs are
aligned with specific graduate learning outcomes – that is, the skills and knowledge graduates are
expected to have upon completion of their studies – and this assessment task is an important tool in
determining achievement of those outcomes.
2
If you do not demonstrate achievement of the unit learning outcomes, you will not be successful in
this unit.
It is good practice to familiarise yourself with the ULOs and GLOs as they provide guidance on the
knowledge, understanding and skills you’re expected to demonstrate upon completion of the unit.
In this way they can be used to guide your study.
Unit Learning Outcomes (ULO)
ULO 1: Apply fundamental principles of
corporate finance
ULO 3: Critically analyse companies’
information.
ULO 4: Provide insights/recommendations
based on the results of analysis.
Graduate Learning Outcomes (GLO)
GLO1: Discipline-specific knowledge and
capabilities
GLO3: Digital literacy
GLO4: Critical thinking
GLO1: Discipline-specific knowledge and
capabilities
GLO4: Critical thinking
Submission
1. This assignment must be completed in a group of two (or individually by informing the Unit
Coordinator). For all students, the first page of your assignment report must clearly show the
full names and student ID numbers of both group members.
2. Submit your assignment as a SINGLE MS Word document only (not PDFs or other file formats).
Workings in Excel must be embedded into the word file (‘embedded’ means the marker can
click on your table, which will then open in Excel, so we can check your workings). Do not
submit separate files.
Steps of embed excel file into word: Choose insert -> object -> create from file -> browse your
file and choose the one you want to embed –> click ‘display as icon’
3. Name your Microsoft (MS) Word document using your student number(s). For example,
1234566.doc, or – if your group has two members – 1234508_1234509.doc. Each group must
submit one document into the assignment drop box with all student names and IDs on the front
page of the submission.
4. Submitting a hard copy of this assignment is not required. You must keep a backup copy of every
assignment you submit, until the marked assignment has been returned to you. In the unlikely
event that one of your assignments is misplaced, you will need to submit your backup copy.
5. Any work you submit may be checked by electronic or other means for the purposes of detecting
collusion and/or plagiarism. Plagiarism and collusion constitute extremely serious breaches of
academic integrity. They are forms of cheating, and severe penalties are associated with them,
including cancellation of marks for a specific assignment, for a specific unit or even exclusion
from the course.
Plagiarism occurs when a student passes off as the student’s own work, or copies without
acknowledgement as to its authorship, the work of any other person or resubmits their own
work from a previous assessment task.
3
Collusion occurs when a student obtains the agreement of another person for a fraudulent
purpose, with the intent of obtaining an advantage in submitting an assignment or other work.
4
Balance Date
30/06/2022
30/06/2022
30/06/2022
30/06/2022
30/06/2021
30/06/2021
30/06/2021
30/06/2021
30/06/2020
30/06/2020
30/06/2020
30/06/2020
30/06/2019
30/06/2019
30/06/2019
30/06/2019
30/06/2018
30/06/2018
30/06/2018
30/06/2018
30/06/2017
30/06/2017
30/06/2016
30/06/2016
30/06/2015
30/06/2015
30/06/2014
30/06/2014
30/06/2013
30/06/2013
30/06/2012
30/06/2012
30/06/2011
30/06/2011
30/06/2010
30/06/2010
30/06/2009
30/06/2009
30/06/2008
30/06/2008
average dividend
Dividend Type
Final
Special Cash
Interim
Special Cash
Final
Special Cash
Interim
Special Cash
Final
Special Cash
Interim
Special Cash
Final
Special Cash
Interim
Special Cash
Final
Special Cash
Interim
Special Cash
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
25.77086275
Cent Per Share
7.50 AUD
1.00 AUD
6.00 AUD
2.00 AUD
5.00 AUD
3.00 AUD
5.00 AUD
3.00 AUD
5.00 AUD
3.00 AUD
5.00 AUD
3.00 AUD
5.00 AUD
3.00 AUD
5.00 AUD
3.00 AUD
7.50 AUD
3.50 AUD
7.50 AUD
3.50 AUD
15.50 AUD
15.50 AUD
15.50 AUD
15.50 AUD
15.50 AUD
15.00 AUD
15.00 AUD
14.50 AUD
14.00 AUD
14.00 AUD
14.00 AUD
14.00 AUD
14.00 AUD
14.00 AUD
14.00 AUD
14.00 AUD
14.00 AUD
14.00 AUD
14.00 AUD
14.00 AUD
Currency
Franked %
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Dividend Ex Date
24/08/2022
24/08/2022
02/03/2022
02/03/2022
25/08/2021
25/08/2021
24/02/2021
24/02/2021
26/08/2020
26/08/2020
26/02/2020
26/02/2020
28/08/2019
28/08/2019
27/02/2019
27/02/2019
29/08/2018
29/08/2018
28/02/2018
28/02/2018
30/08/2017
01/03/2017
24/08/2016
01/03/2016
25/08/2015
25/02/2015
27/08/2014
24/02/2014
19/08/2013
18/02/2013
20/08/2012
20/02/2012
22/08/2011
21/02/2011
23/08/2010
22/02/2010
24/08/2009
06/03/2009
25/08/2008
03/03/2008
Books Close Date
25/08/2022
25/08/2022
03/03/2022
03/03/2022
26/08/2021
26/08/2021
25/02/2021
25/02/2021
27/08/2020
27/08/2020
27/02/2020
27/02/2020
29/08/2019
29/08/2019
28/02/2019
28/02/2019
30/08/2018
30/08/2018
01/03/2018
01/03/2018
31/08/2017
02/03/2017
25/08/2016
03/03/2016
27/08/2015
27/02/2015
29/08/2014
28/02/2014
23/08/2013
22/02/2013
24/08/2012
24/02/2012
26/08/2011
25/02/2011
27/08/2010
26/02/2010
28/08/2009
13/03/2009
29/08/2008
07/03/2008
Pay Date
22/09/2022
22/09/2022
01/04/2022
01/04/2022
23/09/2021
23/09/2021
26/03/2021
26/03/2021
24/09/2020
24/09/2020
27/03/2020
27/03/2020
26/09/2019
26/09/2019
29/03/2019
29/03/2019
27/09/2018
27/09/2018
29/03/2018
29/03/2018
28/09/2017
31/03/2017
23/09/2016
01/04/2016
25/09/2015
27/03/2015
26/09/2014
28/03/2014
20/09/2013
22/03/2013
21/09/2012
23/03/2012
23/09/2011
25/03/2011
24/09/2010
26/03/2010
25/09/2009
09/04/2009
26/09/2008
04/04/2008
Note
—————————————-
FV
Annual Dividend
7.92193345 15.4219334507917
9.05363823 14.0536382294762
9.05363823 14.0536382294762
9.05363823 14.0536382294762
12.4487526 19.9487525655298
17.5414241 33.0414240696102
17.5414241 33.0414240696102
16.9755717 32.4755716802679
16.4097193 31.4097192909256
15.8438669 29.8438669015834
15.8438669 29.8438669015834
15.8438669 29.8438669015834
15.8438669 29.8438669015834
15.8438669 29.8438669015834
15.8438669 29.8438669015834
Balance Date
30/06/2022
30/06/2022
30/06/2021
30/06/2021
30/06/2020
30/06/2020
30/06/2019
30/06/2019
30/06/2018
30/06/2018
30/06/2017
30/06/2017
30/06/2016
30/06/2016
30/06/2015
30/06/2015
30/06/2014
30/06/2014
30/06/2013
30/06/2013
30/06/2012
30/06/2012
30/06/2011
30/06/2011
30/06/2010
30/06/2010
30/06/2009
30/06/2009
30/06/2008
30/06/2008
average dividend
Dividend Type
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Cent Per Share
210.00 AUD
175.00 AUD
200.00 AUD
150.00 AUD
98.00 AUD
200.00 AUD
231.00 AUD
200.00 AUD
231.00 AUD
200.00 AUD
230.00 AUD
199.00 AUD
222.00 AUD
198.00 AUD
222.00 AUD
198.00 AUD
218.00 AUD
183.00 AUD
200.00 AUD
164.00 AUD
197.00 AUD
137.00 AUD
188.00 AUD
132.00 AUD
170.00 AUD
120.00 AUD
115.00 AUD
113.00 AUD
153.00 AUD
113.00 AUD
361.0132018
Currency
Franked %
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Dividend Ex Date
17/08/2022
16/02/2022
17/08/2021
16/02/2021
19/08/2020
19/02/2020
14/08/2019
13/02/2019
15/08/2018
14/02/2018
16/08/2017
22/02/2017
17/08/2016
16/02/2016
18/08/2015
17/02/2015
19/08/2014
17/02/2014
19/08/2013
18/02/2013
20/08/2012
20/02/2012
15/08/2011
14/02/2011
16/08/2010
15/02/2010
17/08/2009
16/02/2009
18/08/2008
18/02/2008
Books Close Date
18/08/2022
17/02/2022
18/08/2021
17/02/2021
20/08/2020
20/02/2020
15/08/2019
14/02/2019
16/08/2018
15/02/2018
17/08/2017
23/02/2017
18/08/2016
18/02/2016
20/08/2015
19/02/2015
21/08/2014
21/02/2014
23/08/2013
22/02/2013
24/08/2012
24/02/2012
19/08/2011
18/02/2011
20/08/2010
19/02/2010
21/08/2009
20/02/2009
22/08/2008
22/02/2008
Pay Date
29/09/2022
30/03/2022
29/09/2021
30/03/2021
30/09/2020
31/03/2020
26/09/2019
28/03/2019
28/09/2018
28/03/2018
29/09/2017
04/04/2017
29/09/2016
31/03/2016
01/10/2015
02/04/2015
02/10/2014
03/04/2014
03/10/2013
05/04/2013
05/10/2012
05/04/2012
06/10/2011
01/04/2011
01/10/2010
01/04/2010
01/10/2009
23/03/2009
01/10/2008
02/04/2008
Note
——————————-
FV
Annual Dividend
178.3983
388.3983
152.9129
352.9129
203.8838
301.8838
203.8838
434.8838
203.8838
434.8838
202.8644
432.8644
201.8450
423.8450
201.8450
423.8450
186.5537
404.5537
167.1847
367.1847
139.6604
336.6604
134.5633
322.5633
122.3303
292.3303
115.1944
230.1944
115.1944
268.1944
Balance Date
30/06/2022
30/06/2022
30/06/2021
30/06/2021
30/06/2020
30/06/2020
30/06/2019
30/06/2019
30/06/2018
30/06/2018
30/06/2017
30/06/2017
30/06/2016
30/06/2016
30/06/2015
30/06/2015
30/06/2014
30/06/2014
30/06/2013
30/06/2013
30/06/2012
30/06/2012
30/06/2011
30/06/2011
30/06/2010
30/06/2010
30/06/2009
30/06/2009
30/06/2008
30/06/2008
average dividend
Dividend Type
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Cent Per Share
118.00 USD
142.29 AUD
158.97 AUD
134.91 AUD
146.96 AUD
147.13 AUD
145.45 AUD
120.32 AUD
127.82 AUD
100.50 AUD
72.00 USD
83.78 AUD
88.67 AUD
81.47 AUD
89.99 AUD
58.00 USD
60.00 USD
53.00 USD
52.00 USD
50.00 USD
47.00 AUD
36.00 AUD
45.00 AUD
35.00 AUD
45.00 AUD
35.00 AUD
40.00 AUD
30.00 AUD
23.00 AUD
23.00 AUD
169.2759388
Currency
Franked %
10.00
0.00
10.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
4.00
0.00
11.00
0.00
0.00
0.00
100.00
0.00
Dividend Ex Date
06/09/2022
07/03/2022
02/09/2021
04/03/2021
10/09/2020
11/03/2020
10/09/2019
13/03/2019
11/09/2018
14/03/2018
12/09/2017
15/03/2017
13/09/2016
23/03/2016
07/09/2015
16/03/2015
08/09/2014
05/03/2014
09/09/2013
05/03/2013
17/09/2012
14/03/2012
19/09/2011
08/03/2011
13/09/2010
09/03/2010
14/09/2009
10/03/2009
16/09/2008
14/03/2008
Books Close Date
07/09/2022
08/03/2022
03/09/2021
05/03/2021
11/09/2020
12/03/2020
11/09/2019
14/03/2019
12/09/2018
15/03/2018
13/09/2017
16/03/2017
14/09/2016
24/03/2016
09/09/2015
18/03/2015
10/09/2014
12/03/2014
13/09/2013
12/03/2013
21/09/2012
20/03/2012
23/09/2011
15/03/2011
17/09/2010
15/03/2010
18/09/2009
16/03/2009
22/09/2008
20/03/2008
Pay Date
05/10/2022
06/04/2022
30/09/2021
01/04/2021
09/10/2020
09/04/2020
11/10/2019
12/04/2019
12/10/2018
13/04/2018
13/10/2017
13/04/2017
07/10/2016
15/04/2016
02/10/2015
10/04/2015
03/10/2014
04/04/2014
04/10/2013
05/04/2013
12/10/2012
13/04/2012
14/10/2011
08/04/2011
08/10/2010
09/04/2010
09/10/2009
09/04/2009
10/10/2008
14/04/2008
Note
-1 AUD$ = 0.73090012 USD$
1 AUD$ = 0.74230000 USD$
1 AUD$ = 0.77090000 USD$
1 AUD$ = 0.72810000 USD$
1 AUD$ = 0.64570000 USD$
1 AUD$ = 0.6875 USD$
1 AUD$ = 0.70646400 USD$
1 AUD$ = 0.72759000 USD$
1 AUD$ = 0.78610200 USD$
-AUD 1.00 / USD 0.763942
1 AUD$ = 0.76693000 USD$
1 AUD$ = 0.71189600 USD$
1 AUD$ = 0.733407 USD$
—————-
FV
Annual Dividend
161.030273 279.030272959021
152.678292 311.648291692329
166.507724 313.467724087854
136.166719 281.616718971322
113.73633 241.556330257795
94.8142264
166.81422635819
92.1999883 180.869988319428
65.6388772 155.628877163702
59.9803533
119.98035327028
56.5852389 108.585238934226
40.741372 87.7413720326429
39.6096673 84.6096672539584
39.6096673 84.6096672539584
33.9511434 73.9511433605358
26.0292099 49.0292099097441

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