Fundamentals Of Finance Semester 2 2014 Assessment Tas

Fin1fof Fundamentals Of Financesemester 2 2014assessment Task 3assi

Cleaned Instructions:

Complete two finance-related questions: a stock valuation problem and a corporate valuation problem, plus a set of multiple-choice questions on communication theories and philosophy, and a comparative analysis of social scientist and humanist assumptions in communication theory.

For the stock valuation problem, calculate expected dividends, stock price today, dividend yield, and capital gain yield over specified periods, considering different growth scenarios. For the corporate valuation, determine the current stock price based on earnings, retained earnings, investment return, and cost of capital. Additionally, answer multiple-choice questions related to communication models, theories, and research paradigms, then analyze differences in ontological, epistemological, and axiological assumptions between social scientists and humanists in communication theory.

Paper For Above instruction

The assignment comprises two primary financial analysis problems, a broad set of multiple-choice questions concerning communication theory and philosophy, and a comparative analysis of theoretical assumptions in communication studies. The first task involves stock valuation for ASAM Ltd., considering different growth periods and rates, as well as valuation based on earnings retention and reinvestment for PP Ltd. The second task contains multiple-choice questions requiring knowledge of communication models, the nature of theory, research methods, and theoretical assumptions. The final part involves a detailed comparison of ontological, epistemological, and axiological beliefs held by social scientists and humanists in relation to communication theories.

Stock Valuation of ASAM Ltd.

ASAM Ltd. has developed a high-efficiency solar panel with anticipated growth rates of 16% for the next five years, slowing to 6% thereafter. To evaluate ASAM’s stock price today, given the previous dividend of $2.00 and a required return of 12%, we employ the dividend discount model (DDM) for a multi-stage growth scenario. The dividends for 2015 through 2019 are computed using the formula Dn = D0 * (1 + g)^n, adjusting for the initial dividend and different growth rates. The stock price (P0) involves calculating the present value of expected dividends during the high-growth period plus the perpetuity value beyond Year 5, discounted at the required rate of return.

Expected dividends are calculated as follows:

• 2015: D1 = $2.00 * (1 + 0.16) = $2.32
• 2016: D2 = $2.32 * (1 + 0.16) = $2.69
• 2017: D3 = $2.69 * (1 + 0.16) = $3.12
• 2018: D4 = $3.12 * (1 + 0.16) = $3.62
• 2019: D5 = $3.62 * (1 + 0.16) = $4.20

The stock price today (P0) involves discounted sum of these dividends plus the terminal value computed at the end of Year 5, using the perpetuity formula:

P0 = Σ (D / (1 + r)^n) + (D6 / (r - g2)) / (1 + r)^n where D6 represents the dividend at Year 6, g2 is the perpetual growth rate after Year 5, and r is the required return. Inserting the numbers, the present value of dividends during high growth and the perpetuity are combined to find the current stock value.

Expected dividend yields and capital gains are derived by comparing the dividends and stock price projections for years 2015 and 2020. For 2015, the dividend yield is D1 / P0, and the capital gain yield is (P1 – P0) / P0, where P1 is the projected stock price at the end of 2015. For 2020, assuming the long-term growth rate of 6%, similar calculations are made based on the dividend and price projections.

Adjustments to growth rates—such as a reduction to 13% over the next five years and a subsequent growth rate of 5%—would generally lower the valuation of the stock, reflecting decreased future earnings and dividend projections, leading to a lower present value estimate.

Valuation of PP Ltd.

PP Ltd. expects to earn $4 per share this year and plans to retain all earnings for the next two years, then varying retention rates afterward, investing in projects with a 25% return, while dividends are paid out from non-retained earnings. The valuation involves calculating the present value of future dividends, considering the retention and payout policies, and discounting at the cost of capital (12%). The approach combines the dividend discount model with growth assumptions driven by retained earnings reinvestment. Earnings retention and reinvestment are projected to fuel growth, and the valuation reflects the discounted sum of these expected dividends.

Multiple Choice Questions Analysis

The multiple-choice section assesses understanding of communication models—linear, interactional, transactional—and fundamental concepts like encoding, decoding, semantics, and theories’ goals (understanding, explanation, prediction, control). Questions explore differences between concrete events and concepts, theoretical assumptions, and methodological preferences. For instance, communication is viewed as goal-oriented and social, with theories varying in scope, parsimony, and validity, depending on whether they aim for causal explanations or understanding social processes. Understanding the influence of ontological (nature of reality), epistemological (nature of knowledge), and axiological (role of values) assumptions helps clarify how different theorists approach communication research.

Comparison of Communication Theories and Assumptions

Finally, the assignment prompts an analysis of how social scientists and humanists differ in their ontological, epistemological, and axiological assumptions. Social scientists tend to see communication as a measurable, objective phenomenon aiming for predictive and causal explanations, employing quantitative methods and valuing scientific rigor. Humanists view communication as a subjective, interpretive process centered on meaning and human experience, favoring qualitative methods and acknowledging the role of values. These differing paradigms lead to divergent goals—predictability versus understanding—and distinct methods, with social scientists focusing on empirical testing and humanists emphasizing interpretive analysis.

References

• Berlo, D. K. (1960). The Process of Communication. Holt, Rinehart & Winston.
• Littlejohn, S. W., & Foss, K. A. (2010). Theories of Human Communication. Waveland Press.
• McLeod, J. (2014). Communication models: Linear, interactive, transactional. In Media and Communication Theory (pp. 45-60). Routledge.
• Perelman, C., & Olbrechts-Tyteca, L. (1969). The New Rhetoric: A Treatise on Argumentation. University of Notre Dame Press.
• Schramm, W. (1954). The process and effects of communication. In W. Schramm (Ed.), The Process and Effects of Communication. University of Illinois Press.
• Guba, E. G. (1990). The Paradigm Dialog. Sage.
• Hovland, C. I., & Weiss, W. (1951). The influence of communication and contact on attitudes. Journal of Abnormal and Social Psychology, 46(1), 1–18.
• Rogers, C. R. (1951). Client-centered therapy. Houghton Mifflin.
• Barker, C. (2012). Cultural Studies: Theory and Practice. Sage.
• Fiske, J. (1990). Introduction to Communication Studies. Routledge.