Description
CAREFULLY
• THE ASSIGNMENT MUST BE SUBMITTED ON BLACKBOARD (WORD FORMAT ONLY) VIA ALLOCATED FOLDER.
• ASSIGNMENTS SUBMITTED THROUGH EMAIL WILL NOT BE ACCEPTED.
• STUDENTS ARE ADVISED TO MAKE THEIR WORK CLEAR AND WELL PRESENTED; MARKS MAY BE REDUCED FOR POOR PRESENTATION. THIS INCLUDES FILLING YOUR INFORMATION ON THE COVER PAGE.
• STUDENTS MUST MENTION QUESTION NUMBER CLEARLY IN THEIR ANSWER.
• LATE SUBMISSION WILL NOT BE ACCEPTED.
• Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
• Submissions without this cover page will NOT be accepted.
Restricted – مقيد
Assignment Activity 3:
After completion of the Assignment the student will be able to:
CLO2Recognize qualitatively and quantitatively the major features public and private debt as well as the covenants and repayment provisions of deb and Estimate the cost of capital.
Case Study: Capital Cost Analysis at Almarai Ltd.
Background: Almarai Ltd., a leading food and beverage company in Saudi Arabia, is evaluating a new dairy production facility. To assess the project’s feasibility, the finance team must calculate the company’s Weighted Average Cost of Capital (WACC) and use it to discount future cash flows.
Financial Snapshot:
• Market value of equity: SAR 800 million
• Market value of debt: SAR 200 million
• Cost of equity: 10%
• Cost of debt: 5%
• Corporate tax rate: 20%
• Expected annual cash flows from the project: SAR 100 million for 5 years
• Terminal growth rate: 3%
Essay Questions (Answer each in 100–150 words):
1. How is WACC calculated, and why is it important in evaluating Almarai’s investment project?
2. What role does capital structure play in determining WACC, and how might Almarai adjust its financing to optimize it?
3. How does WACC influence the valuation of future cash flows, and what risks should Almarai consider when relying on this metric?
Answer:
Restricted – مقيد
وزارة التعليم
الجامعة السعودية اإللكترونية
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 3
Islamic Finance
Due Date: 23/11/2025 @ 23:59
Course Name: Corporate Finance
Student’s Name:
Course Code: FIN 201
Student’s ID Number:
Semester: First
CRN:
Academic Year: 2025-26th
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
/10
Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
•
•
•
•
•
•
•
•
Restricted – مقيد
The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented; marks may be reduced
for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Assignment Activity 3:
After completion of the Assignment the student will be able to:
CLO2 Recognize qualitatively and quantitatively the major features public and private debt as
well as the covenants and repayment provisions of deb and Estimate the cost of capital.
Case Study: Capital Cost Analysis at Almarai Ltd.
Background: Almarai Ltd., a leading food and beverage company in Saudi Arabia, is evaluating a
new dairy production facility. To assess the project’s feasibility, the finance team must calculate
the company’s Weighted Average Cost of Capital (WACC) and use it to discount future cash
flows.
Financial Snapshot:
•
Market value of equity: SAR 800 million
•
Market value of debt: SAR 200 million
•
Cost of equity: 10%
•
Cost of debt: 5%
•
Corporate tax rate: 20%
•
Expected annual cash flows from the project: SAR 100 million for 5 years
•
Terminal growth rate: 3%
Essay Questions (Answer each in 100–150 words):
1. How is WACC calculated, and why is it important in evaluating Almarai’s investment
project?
2. What role does capital structure play in determining WACC, and how might Almarai adjust
its financing to optimize it?
3. How does WACC influence the valuation of future cash flows, and what risks should
Almarai consider when relying on this metric?
Answer:
Restricted – مقيد
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