BUS 505: Final Project Document
Overview & Rubric
Your final project for this course is to prepare a financial analysis. This final project takes a close look at two corporations, Bayer and Monsanto. Bayer is considering a bid for United States seed company Monsanto (Snider, 2016). For purposes of this project, you will act as the Chief Financial Officer of Monsanto Corporation, analyzing financial documents and determining whether Monsanto should indeed go forward with acceptance of the purchase.
project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. Preliminary milestones will be submitted in Modules Four and Six. The final submission will occur in Module Eight.
Milestones
| Milestone 1: | Evaluation of the Proposal | Due in Module 4 |
| Milestone 2: | Evaluation of an Alternative Opportunity | Due in Module 6 |
| Milestone 3: | Final Project Submission | Due in Module 8 |
In this assignment you will demonstrate your mastery of the following course outcomes:
| [CO1] | Analyze financial reports to determine a firm’s performance. |
| [CO2] | Apply the strategic planning processes necessary to manage the long- and short-term financial activities of the firm. |
| [CO3] | Perform valuation of financial instruments. |
| [CO4] | Evaluate the appropriateness of an investment using applicable economic, industry, and competitive analysis. |
Background Information (applies to Milestones One through Three):
Bayer is a life science firm with a more than 150-year history and core competencies in the areas of healthcare and agriculture. With its innovative products, it contributes to finding solutions major challenges, such as a growing and aging world population requiring improved medical care and an adequate supply of food. Bayer addresses these issues by preventing, alleviating and treating diseases, and helping to provide a reliable supply of high-quality food, feed and plant-based raw materials. Bayer Pharmaceutical is Bayer‘s largest division in terms of total sales. This division focuses on researching, developing and marketing innovative medicines with a positive cost-benefit ratio primarily in the therapeutic areas of cardiology, oncology, gynecology, hematology and ophthalmology. To safeguard long-term growth, Bayer is currently seeking increase its investment in research and development. Besides expanding early research, Bayer is concentrating on the clinical development of active drug substance candidates in the therapeutic areas of cardiology, oncology, hematology and gynecology. In addition, it is selectively expanding and supplementing its development portfolio through licensing agreements and acquisitions. The Crop Science Division of Bayer, on the other hand, focuses on improvement in agricultural sustainability, crop yields and quality, as well as the leveraging of digitization to help make products safer (Bayer, 2016). Bayer’s aim is to help shape the future of the agricultural industry with innovative offerings that increase its productivity, thus generating profitable and sustainable growth for Crop Science and its customers and enabling the production of sufficient food, animal feed and renewable raw materials for a growing world population despite the limited amount of available arable land. This strategy is complementary to its Animal Science Division, which produces animal feed products. Bayer Crop Science Division’s current strategy is to enhance its Crop Protection and Environmental Science portfolio, expand its Seeds business, and to lead the way in innovation and develop holistic solution (Bayer AG, 2016). For purposes of this discussion, assume that Bayer aims to build on its expertise in the integration of seed technology with chemical and biological crop protection.
For purposes of this project, assume that Bayer is seeking to acquire Monsanto Corporation. Monsanto, along with its subsidiaries, is a leading global provider of agricultural products for farmers. Through its seeds, biotechnology-trait products, herbicides and precision agriculture tools, Monsanto (Monsanto, 2016) seeks to provide farmers with solutions that help improve productivity, reduce the costs of farming and produce better foods for consumers and better feed for animals. Monsanto has a worldwide distribution, sales and marketing organization for its agricultural-productivity products. In a growing number of locations throughout the world, it produces directly or contracts with third-party growers for corn seed, soybean, vegetable, cotton, canola and other seeds. The global market for its “Seeds and Genomics” segment is increasingly competitive. Both its row crops and its vegetable seed businesses compete with numerous multinational agrichemical and seed marketers globally, and with hundreds of smaller companies regionally.
Bayer’s proposal would pair Monsanto, the world’s largest seed company, with drug-maker Bayer’s growing seed and crop protection portfolio. Upon announcement of the possibility of such a bid, shares of St. Louis-based Monsanto (MON) rose by 8.7% (Kirchfield, et. al., 2016). Across 2015, immediately following announcement of a possible merger between the two firms, Bayer’s growing agribusiness division saw sales rise 9% to $11.8 billion, while its healthcare sales rose 19% to $26 billion, as market participants reacted to news of the possible merger. Overall, Bayer’s 2015 sales rose 12%, to $52.8 billion (Business Wire, 2014). On the other hand, Monsanto, which makes seeds (corn, cotton, fruits and other vegetables) and crop protection chemicals such as RoundUp, reported sales of $15 billion in its 2015 fiscal year. This was a 5% decline from the previous year (Daily Management Review, 2016). See Table 1, below, for an alternative view of these results.
Prompt:
In this project, you will assume that Bayer is considering a bid for United States seed company Monsanto (Snider, 2016). For purposes of this project, assume that you are Chief Financial Officer of Monsanto Corporation. Bayer’s proposal would pair Monsanto, the world’s largest seed company, with drug maker Bayer’s growing seed and crop protection portfolio. Upon announcement of the possibility of such a bid, shares of St. Louis-based Monsanto (MON) rose by 8.7% (Kirchfield, et. al., 2016). Across 2015, immediately following announcement of a possible merger between the two firms, Bayer’s growing agribusiness division saw sales rise 9% to $11.8 billion, while its healthcare sales rose 19% to $26 billion. Overall, Bayer’s 2015 sales rose 12%, to $52.8 billion (Business Wire, 2014). On the other hand, Monsanto, which makes seeds (corn, cotton, fruits and other vegetables) and crop protection chemicals such as RoundUp, reported sales of $15 billion in its 2015 fiscal year. This was a 5% decline from the previous year (Daily Management Review, 2016). Assume that Monsanto is taxed (TC) at a rate of 35% and its cost of debt (RD) is 12%. See Table 1, below, for an alternative view of this data. In the context of Bayer’s proposal, assume that Bayer’s Beta is 1.24. For purposes of valuation of cash flows in the context of Bayer’s proposal, consider Monsanto’s discounted cash flow for only the upcoming 1 year of sales, and assume that Monsanto is expected to grow at a rate of 3% in the current year. Assume also that Monsanto’s current sales are projected to be $15,239,000, while its equity holdings are estimated to be $9,141,333 and its debt is $12,359,333. Assume that Monsanto’s Profit Margins and Total Asset Turnover are unchanged from 2015 levels. EBIT, depreciation, capital spending, and the change in net working capital will grow at the same rate as sales, which is expected to grow at a rate of 3% across this year, while capital investment will remain stable
As an alternative proposal means of increasing shareholder value, as Chief Financial Officer of Monsanto, you have also been asked to evaluate a management proposal to expand Monsanto’s existing operations to pesticide production, yielding an increase in sales of $3,950,000. In the context of this alternative proposal, assume that there is no excess capacity, and the increase in fixed asset needs would be equal to 70% of this increase in sales, while cost of sales would run 20% of sales, using a percentage of sales approach. Also assume that Monsanto issues dividends at a rate of 1.98% of net sales, and thus the firm’s retention ratio is 98.2%. Assume that Monsanto’s current total level of sales is $15,239,000, while the division involved in this project is expected to yield sales of $2,950,000 in the current year. Assume that the proposed project has a risk and weighted average cost of capital similar to that of Monsanto, and a firm beta similar to that of Monsanto.
Upon receipt of Bayer’s proposal, your company’s Board of Directors has directed you, as Chief Financial Officer of Monsanto Corporation, to review key statistics and other information and report to the Board on the following:
- Taking account of background information and other information supplied here, determine whether to accept or reject this proposal for $62B. For purposes of this analysis, consider discounted adjusted cash flow for only the current year, in which the firm is anticipated to grow at a rate of 3%. Evaluate each of the following:
- From given information (Table 7 will aid you in making these calculations, and has been provided for this purpose):
- Ascertain Monsanto’s weighted average cost of capital (WACC) and use this along with the firm’s growth rate to determine the discounted value of adjusted cash flows. Employ the discounted value of adjusted cash flows to determine how this offer compares to the present value of the firm’s adjusted cash flow (CFA*), using the firm’s WACC.
- Explain the importance that this has for the firm, and for shareholders, noting that this is an issue which you have not covered in previous Milestones – and thus you will use this additional measure alongside measures prepared in Milestone One, as you complete Milestone Three. Use information from all assigned readings to support your analyses.
- Justify your decision to accept or reject this offer using additional evidence drawn from ratio analysis, financial statement analysis, or time and trend analysis, refining your Milestone One analyses as applicable, given information covered in subsequent modules, and given current sales, equity and debt information included here.
- From given information (Table 7 will aid you in making these calculations, and has been provided for this purpose):
- With respect to the firm’s alternative proposal, determine:
- The extent to which Monsanto will have to take on additional debt, given that it wishes to retain its current dividend ratio and does not wish to sell additional equities.
- Calculate the firm’s sustainable growth rate and internal growth rate and use these measures to analyze a decision to accept this alternative proposal. Use these measures and concepts covered in assigned readings including EFN, DuPont Identity and leverage, Modules One through Eight, to explain the importance of these measures to shareholder interests.
Use evidence and assigned readings covered to this point to support your determinations. Present your analysis in a 4–6 page double-spaced document using 12 pt. Times New Roman font. Use APA formatting.
Compose your work in a .doc or .docx file type using a word processor (such as Microsoft Word, etc.) and save it frequently to your computer. For those assignments that are not written essays and require uploading images or PowerPoint slides, please follow uploading guidelines provided by your instructor.
Check your work and correct any spelling or grammatical errors. When you are ready to submit your work, click “Upload Submission.” Enter the submission title and then click on “Select a file to upload.” Browse your computer, and select your file. Click “Open” and verify the correct file name has appeared next to Submission File. Click on “Continue.” Confirm submission is correct and then click on “Accept Submission & Save.”
Turnitin®
This course has Turnitin® fully integrated into the course dropbox. This means that you should only submit your assignments to the dropbox below. Please do not submit your assignment directly to Turnitin.com.
Once submitted, your assignment will be evaluated by Turnitin® automatically. You will be able to view an Originality Report within minutes of your first submission that will show how much of your work has been identified as similar to other sources such as websites, textbooks, or other student papers. Use your Originality Report as a learning tool to identify areas of your assignment that you may not have cited appropriately. You may resubmit your assignment through this dropbox as many times as you need to check to see if you have made improvements, until the due date of the assignment. However, once you have made your first submission, you will need to wait 24 hours after each subsequent submission to receive a new Originality Report. Plan accordingly as you draft your assignment. Once the due date has passed, your assignment submission will be considered final.
Evaluation
This assignment will be graded using the located on the Course Rubrics page within the Start Here section of the course. Please review the rubric prior to beginning your work so that you ensure your submission meets the criteria in place for this assignment. This assignment is worth 30% of your final course grade.
References
Bayer. (2016). Bayer Global Annual Report.
(Links to an external site.)
Bayer AG (2016). Bayer: Science for a better life
(Links to an external site.)
.
Bloomberg. (2016). United States rates and bonds.
(Links to an external site.)
Business Wire. (2014). Merck Announces Sale of Consumer Care Business to Bayer AG for $14.2 Billion
(Links to an external site.)
.Berkshire Hathaway Business Wire.
Daily Management Review. (2016). Reports of Takeover Interests Causes Monsanto Shares to Jump
(Links to an external site.)
. Daily Management Review.
Kirchfield, A., David, R. and Nair, D. (2016). Bayer considers the offer of Monsanto.
(Links to an external site.)
Bloomberg News.
Monsanto (2016). Annual Report.
(Links to an external site.)
Snider, M. (2016). Chemical firm Bayer makes $62B offer for Monsanto.
(Links to an external site.)
USA Today.
ValuePro. (2016). ValuePro.
(Links to an external site.)
Yahoo Finance. (2016). MON cash flow.
(Links to an external site.)
Yahoo Finance. (2016). MON balance sheet.
(Links to an external site.)
Yahoo Finance. (2016). MON income statement annual.
(Links to an external site.)
Immediate Results from the Bayer Announcement in 2015
| Monsanto (MON) Share Price | Increased 8.7% |
| Bayer Crop Science Division | Sales increase 9% to $11.8 billion |
| Bayer Healthcare Division Sales | Increased 19% to $26 billion |
| Bayer Pharmaceutical Sales | Increased 12%, to $52.8 billion |
| Monsanto Sales | Decreased 5% to $15 billion |
Table 1. Immediate Results from the Bayer Announcement in 2015
ValuPro Net Online Valuation of MONSANTO CORPORATION – 2015
| Return on Assets | 8.56 | Return on Equity | 14.93 | |
| Sales ($mil) | 14,757 | Investment Rate (% of Rev) | 4.78 | |
| Growth Rate (%) | 13.5 | Working Capital (% of Rev) | 29.19 | |
| Net Oper. Profit Margin (%) | 21.3 | Short-Term Assets ($mil) | 11141 | |
| Tax Rate (%) | 30.584 | Short-Term Liab. ($mil) | 4055 | |
| Stock Price ($) | 86.74 | Equity Risk Premium (%) | 3 | |
| Shares Outstanding (mil) | 533.8 | Company Beta | 1.05 | |
| 10-Yr Treasury Yield (%) | 500% | Value Debt Out. ($mil) | 2.054 | |
| Bond Spread Treasury (%) | 1.5 | Value Pref. Stock Out. ($mil) | 0 | |
| Preferred Stock Yield (%) | 7.5 | Company WACC (%) | 8% |
Table 2. ValuePro Net Online Valuation
Monsanto Co. 2015 (Bloomberg Market Rates)
| MON:US | |
| Current Price | 106.00 (USD) |
| Open | 106.80 |
| Day Range | 109.69-109.54 |
| Volume | 18,049,774 |
| Previous Close | 106 |
| 52 Week Range | 81.22-120 |
| 1 Year Return | -7.06% |
| YTD Return | 10.94% |
| Current P/E Ratio (TTM) | 23.67 |
| Earnings Per Share (USD) (TTM) | 4.62 |
| Market Cap (B USD) | 47.747 |
| Shares Outstanding | 436.845 |
| Price/Sales (TTM) | 3.65 |
| Dividend Indicated Gross Yield | 1.98% |
| Sector | Materials |
| Industry | Chemicals |
| Sub-Industry | Agricultural Chemicals |
Table 3. Monsanto Co. Rates
Income Statement – Monsanto Corp.
| Period Ending | 31-Aug-15 | 31-Aug-14 | 31-Aug-13 | ||
| Total Sales | 15,001,000 | 15,855,000 | 14,861,000 | ||
| Cost of Sales | 6,819,000 | 7,281,000 | 7,208,000 | ||
| Gross Profit | 8,182,000 | 8,574,000 | 7,653,000 | ||
| Operating Expenses | |||||
| Research Development | 1,580,000 | 1,725,000 | 1,533,000 | ||
| Selling General and Administrative | 2,686,000 | 2,774,000 | 2,550,000 | ||
| Non Recurring | 393,000 | – | – | ||
| Others | – | – | – | ||
| Total Operating Expenses | – | – | – | ||
| Operating Income or Loss | 3,523,000 | 4,075,000 | 3,570,000 | ||
| Income from Continuing Operations | |||||
| Total Other Income/Expenses Net | 71,000 | – | 31,000 | ||
| Earnings Before Interest and Taxes | 3,594,000 | 4,075,000 | 3,601,000 | ||
| Interest Expense | 433,000 | 248,000 | 172,000 | ||
| Income Before Tax | 3,161,000 | 3,827,000 | 3,429,000 | ||
| Income Tax Expense | 864,000 | 1,078,000 | 915,000 | ||
| Minority Interest | -11,000 | -22,000 | -43,000 | ||
| Net Income from Continuing Ops | 2,286,000 | 2,727,000 | 2,471,000 | ||
| Non-recurring Events | |||||
| Discontinued Operations | 28,000 | 13,000 | 11,000 | ||
| Extraordinary Items | – | – | – | ||
| Effect of Accounting Changes | – | – | – | ||
| Other Items | – | – | – | ||
| Net Income | 2,314,000 | 2,740,000 | 2,482,000 | ||
| Preferred Stock and Other Adjustments | – | – | – | ||
| Net Income Applicable to Common Shares | 2,314,000 | 2,740,000 | 2,482,000 | ||
Table 4. Monsanto Income Statement
Balance Sheet – Monsanto Corp.
| Period Ending | 31-Aug-15 | 31-Aug-14 | 31-Aug-13 | |
| Assets | ||||
| Current Assets | ||||
| Cash and Cash Equivalents | 3,701,000 | 2,367,000 | 3,668,000 | |
| Short Term Investments | 47,000 | 40,000 | 254,000 | |
| Net Receivables | 3,182,000 | 3,466,000 | 3,042,000 | |
| Inventory | 3,496,000 | 3,597,000 | 2,947,000 | |
| Other Current Assets | 199,000 | 205,000 | 166,000 | |
| Total Current Assets | 10,625,000 | 9,675,000 | 10,077,000 | |
| Long Term Investments | 42,000 | 92,000 | 237,000 | |
| Property Plant and Equipment | 4,973,000 | 5,082,000 | 4,654,000 | |
| Goodwill | 4,061,000 | 4,319,000 | 3,520,000 | |
| Intangible Assets | 1,332,000 | 1,554,000 | 1,226,000 | |
| Accumulated Amortization | – | – | – | |
| Other Assets | 610,000 | 746,000 | 496,000 | |
| Deferred Long Term Asset Charges | 277,000 | 450,000 | 454,000 | |
| Total Assets | 21,920,000 | 21,918,000 | 20,664,000 | |
| Liabilities | ||||
| Current Liabilities | ||||
| Accounts Payable | 3,950,000 | 4,359,000 | 3,756,000 | |
| Short/Current Long Term Debt | 687,000 | 315,000 | 63,000 | |
| Other Current Liabilities | 540,000 | 438,000 | 517,000 | |
| Total Liabilities | 14,930,000 | 14,043,000 | 8,105,000 | |
| Stockholders’ Equity | ||||
| Misc. Stocks Options Warrants | – | – | – | |
| Redeemable Preferred Stock | – | – | – | |
| Preferred Stock | – | – | – | |
| Common Stock | 6,000 | 6,000 | 6,000 | |
| Retained Earnings | 10,374,000 | 9,012,000 | 7,188,000 | |
| Treasury Stock | -12,053,000 | -10,032,000 | -4,140,000 | |
| Capital Surplus | 11,464,000 | 10,003,000 | 10,783,000 | |
| Other Stockholder Equity | -2,801,000 | -1,114,000 | -1,278,000 | |
| Total Stockholder Equity | 6,990,000 | 7,875,000 | 12,559,000 | |
| Net Tangible Assets | 1,597,000 | 2,002,000 | 7,813,000 | |
Table 5. Monsanto Balance Sheet
Cash Flow – Monsanto Corp.
| Period Ending | 31-Aug-15 | 31-Aug-14 | 31-Aug-13 | |
| Net Income | 2,314,000 | 2,740,000 | 2,482,000 | |
| Operating Activities, Cash Flows Provided By or Used In | ||||
| Depreciation | 716,000 | 691,000 | 615,000 | |
| Adjustments to Net Income | 240,000 | 233,000 | 113,000 | |
| Changes in Accounts Receivables | 68,000 | -172,000 | 222,000 | |
| Changes in Liabilities | 457,000 | 482,000 | -129,000 | |
| Changes in Inventories | -425,000 | -650,000 | -192,000 | |
| Changes in Other Operating Activities | -273,000 | -292,000 | -414,000 | |
| Total Cash Flow from Operating Activities | 3,108,000 | 3,054,000 | 2,740,000 | |
| Investing Activities, Cash Flows Provided By or Used In | ||||
| Capital Expenditures | -967,000 | -1,005,000 | -741,000 | |
| Investments | 4,000 | 235,000 | 217,000 | |
| Other Cash Flows from Investing Activities | -56,000 | -1,235,000 | -253,000 | |
| Total Cash Flows from Investing Activities | -1,019,000 | -2,095,000 | -777,000 | |
| Financing Activities, Cash Flows Provided by or Used in | ||||
| Dividends Paid | -966,000 | -932,000 | -976,000 | |
| Sale Purchase of Stock | -698,000 | -6,834,000 | -705,000 | |
| Net Borrowings | 1,238,000 | -5,536,000 | 127,000 | |
| Other Cash Flows from Financing Activities | -36,000 | -48,000 | -10,000 | |
| Total Cash Flows from Financing Activities | -430,000 | -2,259,000 | -1,485,000 | |
| Effect of Exchange Rate Changes | -325,000 | -1,000 | -93,000 | |
| Change In Cash and Cash Equivalents | 1,334,000 | -1,301,000 | 385,000 | |
Table 6. Monsanto Statement of Cash Flows
Monsanto Firm Valuation
| Valuation Component | Previous 3-Year Average | Year 1 | Firm Value | |
| EBIT | $3,511,347 | Note that all values are in thousands. This table may be used to present your NPV calculations. | ||
| Depreciation | $674,000 | |||
| Taxes* | $1,228,971 | |||
| Change in NWC | $227,911 | |||
| Capital Spending | -$1,000,000 | |||
| CFA* | 3,728,464 | |||
| Discount factor | ||||
| Discounted CFA* | NPV | |||
| Debt | $12,359,933 | NPV-Debt | ||
Table 7. Monsanto Firm Valuation Using Average Expected Sales Based on 3-Year Average of Previous Results
Rubric
BUS 505 M8 Milestone 3
BUS 505 M8 Milestone 3
| Criteria | Ratings | Pts | |
| 25 pts | |||
| 25 pts | |||
| 15 pts | |||
| 10 pts | |||
| 15 pts | |||
| 10 pts | |||
| Total Points: 100 | |||
| 25 pts Level 4 Evaluation of the offer compared to the present value of adjusted future cash flows (CFA*) is computed appropriately and in detail, and CFA is computed accurately. Conceptual importance of WACC to shareholder interests is fully and accurately described. |
20 pts Level 3 Evaluation of the offer compared to the present value of adjusted future cash flows (CFA*) is computed appropriately, though minor details are missing, and CFA is computed accurately. Conceptual importance of WACC to shareholder interests is described. |
15 pts Level 2 Evaluation of the offer compared to the present value of adjusted future cash flows (CFA*) is identified, but not computed appropriately, with major details missing and evidence of misconceptions, and CFA is computed. |
0 pts Level 1 Evaluation of the offer compared to the present value of adjusted future cash flows (CFA*) is not identified or described. CFA is not computed, or is substantially lacking in accuracy. |
| This criterion is linked to a Learning Outcome Justification of Decision |
| 25 pts Level 4 The proposed decision to accept or reject the offer is thoroughly laid out, and are relevant and specific to the utilization of additional evidence drawn from ratio analysis, financial statement analysis, and time and trend analysis. The proposed decision is supported with clear, thorough, appropriate, and evidence-based explanations and justifications relevant to the conceptual underpinnings of ratio analysis, financial statement analysis, and time and trend analysis. Conceptual importance of WACC to shareholder interests is accurately and fully described. |
20 pts Level 3 A justification of the proposed decision to accept or reject the offer is clearly laid out, and is relevant and specific to the utilization of additional evidence drawn from ratio analysis, financial statement analysis, and time and trend analysis, but may not be inaccurate and/or missing details. The proposed decision is supported with appropriate and evidence-based explanations and justifications relevant to the targeted conceptual underpinnings of ratio analysis, financial statement analysis, and time and trend analysis. Conceptual importance of WACC to shareholder interests is accurately described. |
15 pts Level 2 A justification of the proposed decision to accept or reject the offer is provided, but does not use substantial evidence drawn from ratio analysis, financial statement analysis, and time and trend analysis. The proposed decision is vaguely supported, with inaccurate justifications not necessarily relevant to the targeted conceptual underpinnings of ratio analysis, financial statement analysis, and time and trend analysis. Conceptual importance of WACC to shareholder interests is insufficiently described. |
0 pts Level 1 No justification of the proposed decision to accept or reject the offer was provided. Evidence drawn from ratio analysis, financial statement analysis, and time and trend analysis was not provided. Conceptual importance of WACC to shareholder interests is not described. |
| This criterion is linked to a Learning Outcome Alternative Project Debt Determination |
| 15 pts Level 4 A determination regarding the extent to which Monsanto will take on additional debt is described appropriately and in detail. Computation of debt is substantially accurate and detailed. |
12 pts Level 3 A determination regarding the extent to which Monsanto will take on additional debt is described appropriately, though minor details are missing. Computation of debt is accurate. |
8 pts Level 2 A determination regarding the extent to which Monsanto will take on additional debt is identified, but not described appropriately, with major details missing and evidence of misconceptions. Computation of debt is reasonably accurate. |
0 pts Level 1 A determination regarding the extent to which Monsanto will take on additional debt is not identified or described. Computation of debt is substantially inaccurate. |
| This criterion is linked to a Learning Outcome Evaluation of Decision |
| 10 pts Level 4 Evaluation of the decision to accept or reject the alternative proposal is appropriate and described in detail, including concepts such as: DuPont Identity and leverage. Calculation of the firm’s sustainable growth rate and internal growth rate is described correctly. |
8 pts Level 3 Evaluation of the decision to accept or reject the alternative proposal is computed appropriately, though minor details are missing, and concepts such as: DuPont Identity and leverage are accurate. Calculation of the firm’s sustainable growth rate and internal growth rate is described. |
6 pts Level 2 Evaluation of the decision to accept or reject the alternative proposal is identified, but not described appropriately, with major details missing and evidence of misconceptions. Calculation of the firm’s sustainable growth rate and internal growth rate is inaccurate and/or incomplete. |
0 pts Level 1 Evaluation of the decision to accept or reject the alternative proposal is not identified or described. The firm’s sustainable growth rate and internal growth rate is not computed, or is substantially lacking in accuracy. |
| This criterion is linked to a Learning Outcome Justify Acceptability of Alternative Project |
| 15 pts Level 4 The justification of a proposed decision regarding the acceptability of the alternative project is thoroughly laid out, and are relevant and specific to the utilization of additional evidence drawn from the point of view of the shareholders including sustainable growth rate, internal growth rate, EFN, leverage, DuPont Identity and debt-equity ratio. The proposed decision is supported with clear, thorough, appropriate, and evidence-based explanations and justifications relevant to the conceptual underpinnings of concepts covered in assigned readings. |
12 pts Level 3 The justification of a proposed decision regarding the acceptability of the alternative project is clearly laid out, and is relevant and specific to the utilization of additional evidence drawn from the point of view of the shareholders including sustainable growth rate, internal growth rate, EFN, leverage, DuPont Identity and debt-equity ratio, but may be inaccurate and/or missing details. The proposed decision is supported with appropriate and evidence-based explanations and justifications relevant to the targeted conceptual underpinnings of concepts covered in assigned readings. |
9 pts Level 2 A justification of a proposed decision regarding the acceptability of the alternative project is provided but does not use additional evidence drawn from the point of view of the shareholders, including sustainable growth rate, internal growth rate, EFN, leverage, DuPont Identity and debt-equity ratio. The proposed decision is vaguely supported, with inaccurate justifications not necessarily relevant to the targeted conceptual underpinnings of concepts covered in assigned readings. |
0 pts Level 1 No justification of a proposed decision regarding the acceptability of the alternative project is provided. |
| This criterion is linked to a Learning Outcome Control of Syntax, Mechanics, and Format |
| 10 pts Level 4 Choice of words and sentences demonstrate expertise in the field, using relevant key terms appropriately to convey messages in a natural way, with details and language that connects with the audience. There are no problems with spelling, punctuation, and grammar. |
8 pts Level 3 Choice of words and sentences demonstrate proficiency in the field, using relevant key terms appropriately to convey messages with language that connect with the audience. There are minimal problems with spelling, punctuation, and grammar that should have been fixed. Formatting is not completely correct. |
6 pts Level 2 Choice of words and sentences demonstrate students’ competence in the field, referring to relevant terms to convey messages, though at times forcibly, or not appropriately. Little to no connection is felt between the writing and audience. There are problems with spelling, punctuation, and grammar, but not enough to interfere with the meaning. Formatting is incorrect. |
0 pts Level 1 Although ideas are presented, there is minimal usage of terms relevant and important to the field. There are significant problems with spelling, punctuation, and grammar that make it difficult to read. Formatting instructions are not followed. |
