Course Project – Part I
The Course Project is an opportunity for you to apply concepts learned to a real-life simulation experience. Throughout the Course Project, you will assume that you work as a financial analyst for AirJet Best Parts, Inc. The Course Project is provided in two parts as follows:
Part I – In Part I, you work with AirJet Best Parts, Inc. staff to identify the best loan options, as well as to valuate stocks and bonds.
Part II – In Part II, you will provide the company with a recommendation for purchasing a new machine. You will base your recommendation on the Net Present Value (NPV) of the capital investment project using the cost of capital (WACC) as ...view middle of the document...
What is the total amount to be paid under each loan? (5 pts)
4. AirJet Best Parts, Inc. has decided to take an $8,000,000 loan being offered by Loans R US at 9.5% APR for 6 years. What is the monthly payment amount on this loan? Do you agree with this decision? Explain your rationale. (15 pts)
Task 2: Evaluating Competitor’s Stock
AirJet Best Parts, Inc. is concerned regarding recent changes in its stock prices for the company and would like to determine the stock prices for key competitors. Key competitors include Raytheon, Boeing, Lockheed Martin, and the Northrop Grumman Corporation.
1. Use Yahoo Finance, Google Finance or some other market watch service to obtain the latest dividend (make sure you get the ANNUAL dividend) amount and stock price for one of the key competitors mentioned above. Then, using the dividend growth model and assuming a dividend growth rate of 3.5%, what is the required rate of return for the company you selected? Include a screen shot of the market watch page from which you gathered the data. (15 pts)
2. Using the rate of return from part 1 above, what should be the current share price of AirJet Best Parts, Inc. if the company maintains a constant 5% growth rate in dividends and the most recent dividend per share paid on the stock was $1.50?...