2 (1). Consider the following information and estimate the Industry Asset beta from the Industry peers...
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2 (1). Consider the following information and estimate the Industry Asset beta from the Industry peers information giving equal weight to each company asset beta) A. Industry Peers Company Tax rate Term Debt (Rs. Million) A B C D E F G 35% 37% 32% 40% 38% 42% 39% Face Value (Rs.) 100 10 100 10 2 25 Book Value (Rs.) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 300 350 400 250 1100 400 800 M. Cap (Rs. Million Net Income (Rs. Million 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 8900 85342 2236 88541 983652 447836 554861 9% 9% 10% 11% 13% 15% 18% 24% 32% 40% 200 5000 300 8000 12530 36752 78955 2 (II). Consider the Industry Asset Beta estimates in question 2 (1) above and the following information. Estimate the Equity beta, CAPM and WACC for each of the given debt to value ratio (from 0% to 90%). With what capital mix do you observe the minimum WACC and why? B. Target financing mix Debt/Value Rf Rdi MRP Equity (Rs. Million) 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 1000 10000 500 9000 700000 200000 90000 Tax rate 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 8000 400 0 80000 Equity Beta 0.5472 0.2638 0.0959 0.9856 900000 0.6357 550000 0.5393 856542 0.669 Equity Beta CAP Mi WACCI 2 (1). Consider the following information and estimate the Industry Asset beta from the Industry peers information giving equal weight to each company asset beta) A. Industry Peers Company Tax rate Term Debt (Rs. Million) A B C D E F G 35% 37% 32% 40% 38% 42% 39% Face Value (Rs.) 100 10 100 10 2 25 Book Value (Rs.) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 300 350 400 250 1100 400 800 M. Cap (Rs. Million Net Income (Rs. Million 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 8900 85342 2236 88541 983652 447836 554861 9% 9% 10% 11% 13% 15% 18% 24% 32% 40% 200 5000 300 8000 12530 36752 78955 2 (II). Consider the Industry Asset Beta estimates in question 2 (1) above and the following information. Estimate the Equity beta, CAPM and WACC for each of the given debt to value ratio (from 0% to 90%). With what capital mix do you observe the minimum WACC and why? B. Target financing mix Debt/Value Rf Rdi MRP Equity (Rs. Million) 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 1000 10000 500 9000 700000 200000 90000 Tax rate 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 8000 400 0 80000 Equity Beta 0.5472 0.2638 0.0959 0.9856 900000 0.6357 550000 0.5393 856542 0.669 Equity Beta CAP Mi WACCI
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Financial Reporting and Analysis
ISBN: 978-1259722653
7th edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
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