MBA II Semester

Assignment 1
Last date of Submission: 3rd April 2019

Cost of Capital Estimation

Instructions: This assignment requires you to estimate the cost of capital and its components. You may
also need to use additional data sources given below to know the cost of debt, expected market return
and beta of the firm. The assignment is due on April 3rd, 2019. Complete the page below and attach all
supporting calculations.

Name of the Company: ______ITC____________________________________

Name of the Students:______Akash _______________________________________

1. Cost of Equity (CAPM)

Estimate regression Beta for your firm. Attach all calculations. Use any website to estimate the
regression Beta, attach the data used for the calculation (at least 2 year’s closing price).

Estimate the cost of equity for your firm based on the CAPM equation. Attach all calculations. Explain
your assumptions related to Beta, the risk-free rate, and the market risk premium.

Beta ________1.15_________________ Beta as per Economic Times

Risk-free Rate _________0.0631__________________ Market Risk Premium

________0.207877________________

Beta _________1.406888_________________________ Cost of Equity

____________0.3556__________________

Assumptions/Explanation:

2. Cost of Equity (Dividend Growth Model)

Estimate the cost of equity for your firm based on the Dividend growth Model. Attach all calculations.
Explain your assumptions related to Dividend growth

Dividend in the end___________3____________ Growth

rate______1.147___________________

Current Market Price of Share_______654.9__________Cost of

Equity________1.151581________________

Assumptions/Explanation:

3. Cost of Equity (Earning Price Model)

Estimate the cost of capital (WACC) for your firm. Attach all calculations. Take the cost of equity from
above calculation. Also, describe any assumptions you will make about the cost of capital going forward.
Earnings per Share (EPS) _________82.35__________ Market price per Share
_________654.9_______________

Cost of Equity______________0.125744________________

Assumptions/Explanation: