Word limits (excluding table of contents, list of references and appendices)
Minimum length : 3,000 words Maximum length : 3,500 words.
Note: - Every word from the introduction to the conclusion is included in the word count, including headings/sub-headings, in-text citations etc. - A penalty of 10% of the mark is applied if word limit exceeded maximum length of 3,500 words.
Style & Format
Style : Report Font size : 12 pt (preferably Calibri) Line spacing : 1.5 lines References : University Harvard Referencing Guide.
You have been hired as a financial consultant to evaluate the capital structure of the media
companies listed on the London Stock Exchange (LSE). Your manager has asked you to complete the
following tasks for the integrated producer broadcaster, ITV plc.
Task 1 (Total 60%) You are required to prepare a report that contains the detailed calculations and critical analysis of the following key information relating to ITV plc:
(a) the sources of finance and financial gearing;
(b) the estimated weighted average cost of capital (WACC);
(c) the limitations of WACC; and
(d) the likely impact upon the company’s weighted average cost of capital if the company wishes to raise additional debt finance.
Task 2 (Total 30%) Based on the attached news article in Apendix 1, you are required to:
(a) provide a detailed valuation of ITV plc using the Dividend Growth and P/E ratio valuation. (10%)
(b) evaluate critically the possible acquisition of ITV by EasyJet.
Learning outcomes to be assessed:
(a) comprehend the primary objective of corporate finance and appraise the different sources of finance; (b) evaluate critically the weighted average cost of capital and capital structure of a firm; and (c) demonstrate a critical awareness of the financial strategies relating to mergers and acquisition.
For the above Tasks 1 and 2, you are strongly recommended to use the information available from
the most recent annual reports and accounts and other relevant sources (e.g. academic journals,
financial news and databases) when writing your report