Understanding the value of the incorporeal, what is the value
of a multi-sided platform business?
Major Assignment for MAF101
Due Date: Please refer to the unit guide
SECTION 1 – Introduction
We are presently observing the reconstitution of financial markets and the emergence of a
number of new business models. Theorists such as Damodaran (2009) have asserted that we
are presently observing a significant shift from manufacturing to service based economies.
This occurrence is said to have given rise firms to an ever increasing number of
organisations deriving their worth primarily from incorporeal properties, rather than
tangible properties. Technology firms in particular are said to derive much of their value
from intangible assets, such as copyrighted properties, patents and human capital.
It becomes evident that many of the approaches taken to value traditional ‘manufacturing’
companies (herewith “traditional models”) may not be applicable to contemporary
information, technology and service based companies (herewith “contemporary models”).
Many of the metrics and techniques adopted in valuing traditional models may result in
spurious conclusions when applied to contemporary models.
Consider several logical issues that hinder the valuation process. The catagorisation of
expenditures is certainly problematic, with many adopting accounting based approaches
that are unhelpful when analyzing contemporary models. Accountants frequently
misallocate operating and capital expenses, when firms invest in incorporeal assets. As such
R&D which is a capital expense is frequently treated as an operating expense resulting in
inapt profit reporting and capital items values (Damodaran, 2009). Additionally, patents
and copyright are particularly pertinent to contemporary business models, but present
significant challenges to those seeking to value firms so reliant on such incorporeal
properties. Goodwill is also a problematic item to value, given its uncertain nature.
Consequently the valuation of a contemporary business model, typified by significant
incorporeal properties, is arguably more challenging than the valuation of more traditional
business models.
Page 2 – MAF101 – Trimester Three Major Assignment
Assignment Tasks
All groups must complete Question 1 and Question 2 and respond to one of
the options (1-12) in Section 3.

SECTION 1 – All groups must answer this question
Question 1. What are the critical challenges associated with valuing a firm with
significant intangible assets? Should valuation approaches be adjusted to accommodate
the differences? If so what differential approaches should be taken?
Question 1 Explanatory note – Clearly a number of issues abound, please ensure that in
your analysis you consider the challenges associated with the valuation of firms heavily
reliant on intellectual properties, such as patents and copyright. Consider for example, how
a patent portfolio could be valued and the various ways that intellectual properties can be
employed.
Question 1 word count: 1000 words
Page 3 – MAF101 – Trimester Three Major Assignment
SECTION 2
Question 2. Select one of the following entities; Google, Yahoo, DropBox or Amazon.
Briefly, describe the entity’s underlying business model. Construct a valuation model to
determine the entity’s intrinsic value.
Question 2 Explanatory note – Possible approaches for the analysis of the entity’s
underlying business model include Balanced Scorecard style approaches and SWOT
analysis (please note that a number of approaches exist beyond these well-known
approaches, that may be employed). Possible approaches to the firm valuation include
Discounted Cash Flow Analysis, Dividend Discount Models, Earnings models and
Regressive models. Please note that not all the noted entities are trading entities but that
does not prevent their valuation. Where earnings data is available it can be included in the
chosen valuation model. Where earnings data is not available students can use various
estimation approaches to determine the value of the entity. Where quantitative methods
are employed in the valuation, an Excel (.xls or .xlsx format) spreadsheet detailing the
model, and showing the calculations completed should accompany the report. Remember
to clearly articulate your assumptions, and comment on the limitations of your analysis
and valuation model.
Question 2 word count: 1500 words
Page 4 – MAF101 – Trimester Three Major Assignment
SECTION 3 – Groups must select one of the following options, and respond
Option 1 – Compare and contrast the performance of the ASX 200 with the LIV EX Index 50
or the LIV EX 100. What are some of the different attributes of each asset class? Discuss the
relative performance of each asset class.
Option 2 – Analyse the price movements of domestic property markets, focusing on residential
property over the last 10 years. Respond to the claim that the market is a speculative asset
bubble.
Option 3 – Compare the operating earnings of Google with those of Facebook over the last
five years, ending FY 2014/2015. What are the observable trends?
Option 4 – Analyse and discuss the major financial services certifications that are considered
pre eminent within the Asia Pacific region. Discuss the suitability of the certifications for
finance professionals within the following vocational areas Financial Analyst, Banking,
Investment Analysis, Brokerage, Financial Risk Management and Financial Planning.
Option 5 – Analyse the performance of crowdfunding as a policy within New Zealand. Discuss
some of the trends (business models, quantum of funds, frequency of fundraising success) for
firms raising funds.
Option 6 – Discuss and conjecture the potential of crowdfunding as a policy within India.
Discuss some of the trends (business models, quantum of funds, frequency of fundraising
success) for firms raising funds.
Option 7 – Analyse the performance of crowdfunding as a policy within the United States.
Discuss some of the trends (business models, quantum of funds, frequency of fundraising
success) for firms raising funds.
Option 8 – It is frequently the case that commentators refer to the Australian currency as a
commodity currency. Consider this statement in light of the association between commodity
prices and the AUD/USD pairing.
Option 9 – Self managed superannuation is becoming a popular choice for many Australians
wanting to take control of their superannuation. What are some of the key drivers behind this
trends. Analyse the data in relation to models of superannuation and fund choice, and discuss
any observable trends.
Option 10 – Consider the role of credit rating agencies such as Standard and Poors and Fitch.
Analyse the ratings of the Australian state government securities issuances, what are some of
the noticeable recent trends?
Option 11 – Cryptographic currency remains largely unregulated. Consider some of the
regulatory responses enacted by nations that have seemed the currency unlawful. What are
some of the observable trends in the value of the popular crypto currencies such as Bitcoin and
Dogecoin.
Option 12 – Cryptographic currency remains largely unregulated. Discuss how crypto
currencies function. What are some of the observable trends in the value of the popular crypto
currencies such as Bitcoin and Dogecoin.
Question 3 word count: 1500 words
Page 5 – MAF101 – Trimester Three Major Assignment
Suggested readings
Please note that this list is provided to assist your preparation and serve as a primer to the
assignment, it is in no way exhaustive. Students would be well advised to look beyond this
list alone when preparing their assignment.
Books & Journal articles
Viney, C., McGrath’s Financial Institutions, Instruments and Markets, 6th/7th Edition
Damodaran, Aswath, Invisible Value? Valuing Companies with Intangible Assets
(September 23, 2009). http://ssrn.com/abstract=1609799 or
http://dx.doi.org/10.2139/ssrn.1609799
Modigliani, F.; Miller, M. (1958). “The Cost of Capital, Corporation Finance and the Theory
of
Investment”. American Economic Review 48 (3): 261–297
Electronic articles
King, K., The Value of Intellectual Property, Intangible Assets and Goodwill
http://www.wipo.int/sme/en/documents/value_ip_intangible_assets.htm
Foster, B., Fletcher, R., and Stout, W., Valuing Intangible Assets, CPA Journal, 2003
http://www.nysscpa.org/cpajournal/2003/1003/features/f105003.htm
Powerpoint presentations & Websites
Damodaran, A., The value of intangibles
http://pages.stern.nyu.edu/~adamodar/pdfiles/ovhds/dam2ed/intangibles.pdf
Damodaran, A., The basics of discounted cash flow valuation
http://people.stern.nyu.edu/adamodar/pdfiles/basics.pdf
Damodaran Online
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/valuation/val.htm
Page 6 – MAF101 – Trimester Three Major Assignment
General expectations
As university level students it is expected that you will critically analyse all the relevant
literature, and consider persuasive academic sources. This means that students should
consult with academic texts, books and journals in addition to newspaper articles.
Using the primary text book from the unit is not sufficient. Students should clearly cite all
sources, employing either accepted methodology for citations, but students must be
consistent in their method.
Submission
All assignments must be submitted online to the DSO assignment drop box. Only one paper
should be submitted per group on DSO, with the other students submitting only the names
of group members in the space provided in the DSO assignment drop-box. Marks will be
deducted for late assignments at a rate of 2 marks per day, unless prior arrangements have
been made with the unit chair.
Page 7 – MAF101 – Trimester Three Major Assignment
Groups
Groups in excess of four will not be permitted under any circumstances. Under certain
circumstances students may complete the assignment individually. Please contact the unit
chair if you would like to complete the assignment individually.
Presentation of assignments
All group members’ names and their student numbers must be clearly displayed on the
front cover assignment sheet. The assignment is to be typed and presented in business
report format including a cover letter, executive summary & table of contents, referencing,
reference list / bibliography and appendices (if applicable). The body of the report should be
within the word limits as stipulated for each question, excluding references, appendices,
table of contents, transmittal letter, numerical tables, and executive summary. You are
required to show the word count after each question. Please note that these are the
maximum counts and that students may write more efficiently and not require the full
allocation. Marks will be deducted for exceeding the word limit.
Assignment weighting
This assignment constitutes 30% of the total mark for unit.
Marking Template
A sample of the marking template is included as a separate attachment, please peruse it for
further guidance. Please note that the marks allocated may be between the noted integers.