Instructions
Answer the five questions below. They focus entirely on the financing, risk/return, Cost of Capital and Budget Forecasting of Largo Global Inc. (LGI) based on the investing activities that took place in project 4. Base your analysis on the data provided and calculated in the Excel workbook. Provide support for your reasoning from the readings in Project 5, Step 1, and the discussion in Project 5, Step 3. Be sure to cite your sources.
Provide a detailed response below each question. Use 12-point font and double spacing. Maintain the existing margins in this document. Your final Word document, including the questions, should not exceed 5 pages. Include a title page in addition to the five pages. Any tables and graphs you choose to include are also excluded from the five-page limit. Name your document as follows: P5_Final_lastname_Report_date.
You must address all five questions and make full use of the information on all tabs of project 5 as well as data in other Excel workbooks (e.g. from project 1: ratio, common-size, and cash flow analysis).
You are strongly encouraged to exceed the requirements by refining your analysis. Consider other tools and techniques that were discussed in the required and recommended reading for Project 5. This means adding an in-depth explanation of what happened in that year for which data was provided to make precise recommendations to LGI.
Title Page
Name
Course and section number
Faculty name
Submission date
Questions
1. How would you assess the evolution of the capital structure of LGI? Reflecting on your work in Project 1, would you consider the risk exposure under control? If not, what are your recommendations?
[insert your answer here]
2. What kind of information do you find valuable in CAPM to guide you in assessing the risk of LGI compared to other firms and the market in general?
3. Identify and differentiate the stakeholders of LGI and explain how each one should perceive and weigh the risk and/or return of the firm.
[insert your answer here]
4. Would you consider the investment made in Project 4 optimally financed considering the proportion of debt that is bearable by LGI? How did the current WACC in Project 5 depart from the state of the firm in Project 1?
[insert your answer here]
5. If you had to advise a potential investor interested in having a minority stake in LGI, what kind of information would you provide to help the investor make a decision? Would you be bullish or have reservations? Support your answer with facts and data from all projects as well as your budget projections.
[insert your answer here]
