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UCL-PKU 国家发展研究院

Corporate Finance Michael Manlangit

· 案例展示

Coursework Brief

• Individual report/essay based on questions on the ‘EnCana Corporation’ case, which is given • Maximum of 2,000 words • Due date is to be confirmed • Approximately one month will be given to complete the coursework Marking • Coursework is subject to double marking/scrutiny, and internal quality inspection by a nominated internal examiner. • All results when first published are provisional until confirmed by the final Examination Board. • No appeals regarding your published mark are possible until after confirmation by the final Examination Board and then only in relation to process not academic judgement. • Please refer to the UCL School of Management Information Centre Moodle site (https://moodle.ucl.ac.uk/course/view.php?id=9400§ion=0) for additional information.

Length of assignment, including word count, and UCL penalties where applicable • UCL has penalties for exceeding specified word count and/or pages and/or both, as appropriate. • Your submission should be a maximum of 2,000 words in a Word/PDF document format. • You MUST state the accurate number of words written on the front cover of your submission sheet. • Submissions below 2,000 words that address the coursework requirements are acceptable. • If you decide to use any references, the recommended referencing system is Harvard but other systems are acceptable. • References are not required. • Any list of references should follow on immediately at the end of your report but are not included in the word count. • All tables, figures, and diagrams are included in the word count. • If you exceed the word count your mark will be reduced by 10 percentage points, i.e. 10 marks. • Illustratively, if your total score is 65%, your score recorded will be 55%. Any reduction will not be applied in such a way as to reduce your total score to below 50%.

Links to learning outcomes This coursework links to a number of the stated learning outcomes relating to this course. The learning outcomes associated with this coursework are stated below: • Understand management objectives from a corporate finance perspective • Understand risk, return, and measuring investment return • Apply the Capital Asset Pricing Model (CAPM) and understand related financial measures and variables including the risk-free rate, equity risk premium, WACC, capital structure, and beta, β

‘EnCana Corporation’ case questions to be answered in the individual essay/report. 100 marks total. 1. Briefly define the cost of capital and explain how it is used in managerial finance. 6 marks. 2. Should the cut-off rate be different for different types of projects? 4 marks. 3. What mix of debt and equity capital has EnCana used to finance its past investments? 5 marks. 4. Should EnCana’s trade credit be included in its capital structure? How is the ‘matching principle’ relevant? 5 marks. 5. What is the cost of debt? 25 marks. • Consider the underwriting cost. • Consider whether the cost of debt should be before tax or after tax. • Consider the difference between the cost of long-term debt and short-term debt. • Should Steven and Barb use current yields for debt, which are much lower than the firm paid in the past? • Would EnCana be eligible for the prime rate of lending between banks? • Use given data from the case and data from elsewhere, if necessary, for your calculations. Clearly explain your assumptions. 6. What is the cost of equity? 25 marks. • Use the dividend growth model. • Also use CAPM. • Explain which result you prefer to use. • Use given data from the case and data from elsewhere, if necessary, for your calculations. Clearly explain your assumptions. 7. How should retained earnings be treated? 5 marks. 8. What is the next source of financing for EnCana? Should it be used as the cut-off rate? 5 marks. 9. What is the overall weighted average cost of capital (WACC)? 15 marks. 10. Do NPV and IRR give the same answer when evaluating projects? 5 marks.

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