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FINM7402 Corporate Finance
Semester 2 2025
INDIVIDUAL ASSIGNMENT
Course assessment weight 20%
(Total Marks: 70)
PENALTIES WILL BE APPLIED FOR LATE SUBMISSIONS.
FAMILIARISE YOURSELF WITH LATE SUBMISSION PENALTIES
OUTLINED IN YOUR COURSE PROFILE.
SUBMISSION INSTRUCTIONS

1. You are required to submit the PDF copy of your assignment in Turnitin using the
Case Study Submission Link on Blackboard. Turnitin also performs a similarity
check for potential plagiarism.
2. Include a “Title Page” in your PDF submission. The title page will include course
code, your full name and student ID number.
3. You are required to submit the Excel file using the Excel File Submission Link on
Blackboard. Show all calculations by using formulas. Any hardcoded value
(calculations not having formulas) will not get any marks.
4. Name your EXCEL file as – “lastname_firstname”.
5. Submission deadline is 3.00 pm (AEST), October 14, 2025. Submissions made
beyond this deadline will be penalised for late submission. The submission portal
will be made available a few days before the submission deadline. PLEASE MAKE
ONLY ONE SUBMISSION. MULTIPLE SUBMISSION IS NOT ALLOWED.
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In this assignment, you will analyze Berger Paints’ capital-structure decision. First, you will
determine the firm’s optimal debt ratio using the cost-of-capital approach. Next, you will apply
the DCF valuation technique to evaluate how Berger’s value changes when moving from its
current debt ratio to the optimal level, and consider whether this valuation technique is the most
appropriate method in this context. Finally, you will assess Berger’s capital-structure decisions in
2023–2024 and evaluate whether they align with the calculated optimal structure.
As a starting point, carefully read “Berger Paints India Limited: Discovering the Optimal
Capital Structure” (see URL on Blackboard under “Assessment” and please make sure you also
read other materials that will strengthen your assignment). Use this case as a background to
carefully develop your answers to the questions listed below:
1. Determine the optimal capital structure for Berger. Specify at what debt ratio
Berger will achieve its optimal capital structure based on the data provided in the
case (for the purpose of computation, the debt ratio may range from 0 percent to
40 percent, in increments of 5 per cent - see Table 1 below as an example). Justify
your choice of the optimal capital structure with explanations. Carefully see the
marking rubric to understand how the total mark for this question is distributed.
[30 marks]

Table 1
Debt ratio Cost of equity Cost of debt WACC
0%
Current debt ratio
5%
10%
15%
20%
25%
30%
35%
40%



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2. Using the DCF valuation technique, compute the change in the value of Berger
as it moves from its current debt ratio to the optimal debt ratio (calculated in
Assignment Question 1). Is this the right valuation approach to use at this point
in the case? Why or why not? If not, is there any other alternative approach that
will be particularly useful in this situation? Explain. [30 marks]

3. In the fiscal year 2023–2024, Berger’s share price has closed at ₹573, with 1.2
billion equities outstanding and an MV of equity of roughly ₹668 billion. During
the same period, Berger’s total debt has fallen to ₹7.53 billion. Why do you think
they have reduced their debts?
Further analysis shows that other firms in the industry, including Asian Paints
Limited, Kansai Nerolac Paints Limited, Indigo Paints Limited and Sirca Paints
India Limited, all have debt to equity ratios less than 0.15. Based on your
calculations of the optimal capital structure in Assignment Question 1, do you
think Berger adjusts their capital structure in next fiscal year (2023-2024) toward
the optimal capital structure? If not, what do you think might be the reasons?
[10 marks]
Further guidelines:

• SHOW ALL YOUR CALCULATIONS BOTH IN THE PDF DOCUMENT AND IN
THE EXCEL FILE.
• Merely stating ‘Yes’ or ‘No’, or providing vague comments are not acceptable answers to
any of the discussion questions. It is the quality of your reasoning and analysis that
matters the most.
• Please be aware that plagiarism, defined as copying and pasting someone else’s words into
your assignment without proper acknowledgement, is unacceptable at UQ. When you
report someone else’s comments or ideas, you need to fully and clearly acknowledge the
source, i.e. list it under ‘References’ that starts on a new page at the end of the main text. It
is also good practice to paraphrase other authors’ words, which would indicate your level of
understanding, instead of making long direct quotations. Nevertheless, a few short direct
quotations may be used to emphasise what you consider to be important points in your
answers. Submissions will be checked for plagiarism using Turnitin (the extensive checking
process involves the World Wide Web as well as previously and currently submitted
assignments, journals and various other publications).
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• AI Statement:

Artificial Intelligence (AI) and Machine Translation (MT) are emerging tools that may support students in
completing this assessment task. Students may appropriately use AI and/or MT in completing this
assessment task. Students must clearly reference any use of AI or MT in each instance.

A failure to reference generative AI or MT use may constitute student misconduct under the Student Code
of Conduct.

Summary of marking criteria

Carefully refer to the assessment rubric posted on Blackboard under Assessment for details.

We hope you enjoy doing your assignment and the knowledge it brings.

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