Question 3 - The Group is provided with the last 5-year financial information of NTPC Limited along with their approximately last 5 years share prices. Click here to access the excel. Click here to access the 5-year financial information of NTPC (Use Capital Assets Pricing Model (CAPM) to estimate its cost of Equity - Cost of Equity = Risk-Free Rate+(Market Rate - Risk-Free Rate) x Beta; For Market Return use BSE SENSEX (data is provided) and take risk-free rate as 6.65% per annum. For calculating the Market Annual Return from Daily returns, use 250 as the number of working days. Also, use the following formula to calculate return from prices Return = [(Price today - Price of the previous day)/ Price of the previous day] Reguired: b) Relative Valuation of the Company uses Price/Earnings Ratio. (Calculate Price/Earnings Ratio of last 5 years, take its average for the projection of next year's (FY 2021) P/E, and predict the price of the Company if it is expected that its EPS (Earning Per Share) will be Rs. 13.50. (Note: For Calculating relative valuation of the company 1. Calculate Price/Earnings Ratio for the last 5 years using annual EPS and Marchend price of each FY. 2 Number of shares outstanding to be calculated by dividing share capital with the face value of the shares share capital/ face value per share) Answer: Price Per Earning = Market Price / Earnings per Share Financial Year Earnings Per Share Market Price at the p/E Ratio end of March FY 20-21 106.45 7.609 FY 19-20 8-238 FY 17-18 | FY 16-17 ' 9.49 ' 165.95 17.486 The market price of NTPC as on 20th May is 111.75 P/E Ratio = 111.75/13.5 = 8.278 To find the PE Ratio for financial year 21-22, we will take the average of last 5 years =60 966/12 5: 1') 193