Instructions:

This is a Group assignment (Part 1) which also includes an Individual component (Part 2).

You must form your own groups (min 2, max 5 people per group).

There are two outputs for this assignment – Part 1: a written business report (identified in Tasks 1 to
5) and Part 2: a written memorandum.

Part 1 of this assignment is worth a maximum of 100 marks and contributes up to 20% of your overall mark for the course.

A Marking Rubric is attached (on the penultimate page) that identifies the way in which marks will be allocated for Part 1 of the assignment.

Part 1: The word-limit for the group report is 1,000 words, excluding table, diagrams etc. This word limit is a maximum, not a target. The due date for this report is 11.59pm on Sunday 25th May 2025.
One member of each group must submit the completed assignment on or before this date.

Late Submissions: Any assignment that is submitted late will be subject to a penalty, equivalent to
10% of the total marks available for the assignment, per day or part thereof.

You are required to present some of your answers using excel. Please refer to
https://www.learninghub.ac.nz/maths/excel/getting-started-with-excel/ for guidance on using
excel.

The final requirement in the assessment is to write a report to the Finance Director of Xero Limited. Some marks will be awarded for the format of your answer. Please refer to
https://www.learninghub.ac.nz/report-writing/ for guidance on report writing.

Where a question requires calculations, you should clearly show these calculations. In the event of an answer being incorrect partial marks may be awarded where workings are show.

This is an assessment item and no further assistance or information about this assignment will be provided by the FINANCE 251 teaching team.

CASE STUDY: Xero Limited (ASX:XRO)

Xero Limited is one of the most prominent cloud-based accounting software providers in the world, recognized for revolutionizing the way small and medium-sized businesses (SMBs) manage their finances. Founded in July 2006 by Rod Drury, a serial entrepreneur with a background in technology, and Hamish Edwards an accountant, Xero has grown from a regional startup into a global tech giant, reshaping the accounting software landscape with its user-friendly, cloud-first approach.

Tasks:

1. Determine Xero’s equity beta and its WACC that is applicable for use in a financial analysis. (Round your WACC calculation upwards to the nearest whole percent). (10 marks)
2. Prepare an excel table showing the investment opportunity’s cash flows over the ten years. (display whole dollar amounts only).
   (15 marks)
3. Calculate the approximate Payback Period, the NPV and the IRR of the investment project.
   (10 marks)
4. You are unsure of the reliability of some of your estimates and want to know how sensitive the project is to volatility in a number of areas. Select three variables that you consider are important to the decision and might have a significant impact on Xero’s investment decision. Use your spreadsheet to conduct a sensitivity analysis on the project by separately changing each of these variables and include the outcomes in your report.
   (15 marks)
5. Write a report to Claire Bramley, Chief Financial Officer of Xero Limited Limited, Evaluating the investment opportunity. Make sure to comment on the impact of your sensitivity analysis. Recommend whether it should or should not proceed and justify your recommendation. Your workings for Tasks 1 – 4 should appear as appendices to your report and your findings from these tasks must be referred to in the report.
   (50 marks)

FINANCE 251 Assignment Part 1 Group Report Marking Rubric

FINANCE 251 Assignment Part 1 Group Report Marking Rubric