Final Project Guidelines

Students should select a company that has issued bonds in the last 3 years so that the information sources can provide sufficient financial data for analysis.

Post the following:

1. Your company choice - I chose Verizon
2. The security chosen (select an individual bond, not a bond fund) - mine is VERIZON COMM 2049, ISIN: US92343VDS07
3. When that security was issued - 2/6/2017

The Final Project is made up of several sections, each listed below. Each section should be a minimum of two pages (excluding charts, graphs, etc.).

• Section 1: Company Background: (20 points) This section should include what industry the firm is in, its products, its competitors, and the stated main reason for needing capital (to fund receivables, capacity expansion, retire older debt, etc.). If you can't find a specific discussion about this, then use your judgment as to why you think the funds were needed and explain your reasoning.
• Section 2: Balance Sheets: (20 points) What did the balance sheet look like in the quarter just prior to issuing the bonds? Include both a copy from before the issue and after the issue. Calculate at least three of the ratios shown in the Moodys Bond Rating Chart contained in the Week 2 Lesson both before and after the bonds were issued, and discuss why you think they are important to your report.
• Section 3: Trends in YTM and Price: (20 points) At what price and YTM was the initial offering sold? Tabulate the price and YTM of the issue at the end of each calendar quarter for the last six quarters. Then, plot the tabulated values to visualize the trends in YTM and prices.
• Section 4: Rate of Return: (20 points) If you were one of the original investors in this issue and you had invested $10,000, what would your total return be if you sold the securities at today's market price? Compute the current duration of the bond and add a brief discussion about your calculations and what the results indicate.
• Section 5: WACC: (20 points) Compute the firm's current WACC assuming the total debt of the firm is in the issue that you analyzed. This means that if the company has more than one debt issue outstanding with a total face value of $X million and your chosen issue involves $Y million, then assume that all $X million is in your issue. This will simplify the calculations without diminishing learning value. Add a brief discussion about your calculations and what the results indicate.
• Conclusion: (10 points) Based on your research in Sections 1-5, discuss at least three overall conclusions about this offering. In your conclusion, please recap your analysis so that a reader can draw upon your expertise in order to make an educated investment decision. The conclusion should draw together all that you have researched and analyzed.