National Rail & Transportation Institute, Vadodara

Allotment of Roll No(s). : MBA Students, 2021-23 Batch

Programme
Sl.No. Appln No. New Roll No. Specialization
Group
Name
1 M000076 2141001 ABHAY GUPTA TEM G7
2 M002515 2141002 ADHIP BANIK TEM G9
3 M000050 2141003 ADITYA DEVGIRKAR TEM G5
4 M001890 2141004 ALARIC N. SANGMA TEM G5
5 M000959 2141005 AMAN VERMA TEM G10
6 M002377 2141006 ANIKET ABHAY WASNIK TEM G3
7 M001824 2141007 ANKUR TEM G8
8 M001311 2141008 ANUKRITI KRISHNA TEM G8
10 M000430 2141009 ARCHISMAN BHATTACHARYYA TEM G8
11 M001503 2141010 ASHLEENA SHARLEY AIVEN TEM G4
12 M000015 2141011 BHANU PRATAP SINGH TEM G4
13 M000174 2141012 DEVASHREE ASHOK KAPSE TEM G4
14 M001822 2141013 DHANANJAY KUMAR MAHATO TEM G9
9 M000922 2141014 DUBEY ANURAG AJAYKUMAR TEM G8
15 M002695 2141015 GOUTAM R SHET TEM G4
16 M002531 2141016 GYANDA SHARMA TEM G6
17 M000634 2141017 HANSHUL DAYMA TEM G12
18 M001205 2141018 HARISH KESARI TEM G6
19 M002478 2141019 HEMANT SANVRIYA TEM G11
20 M000576 2141020 JAYRAJ TRIVEDI TEM G14
34 M000104 2141021 KHOBRAGADE VAIBHAV JAYDEO TEM G10
21 M001262 2141022 PIYUSH CHOUDHARY TEM G11
22 M001974 2141023 POONAM SHENDE TEM G7
23 M001370 2141024 PRADYUM KUMAR TEM G1
24 M001936 2141025 PRAVEEN KUMAR TEM G10
25 M000790 2141026 RAJ NIRALIBEN RASIKBHAI TEM G6
26 M001882 2141027 RAVI MADHESHIYA TEM G1
27 M000738 2141028 SARKAR HARNISHA RAJUBHAI TEM G12
28 M001028 2141029 SHAGUN GARG TEM G3
29 M001886 2141030 SHIVAM SINHA TEM G7
30 M001470 2141031 SHUBHAM SHARMA TEM G7
31 M002214 2141032 SOMESH KUMAR MOHANTY TEM G5
32 M001340 2141033 SWATI AMRIT TEM G13
33 M002745 2141034 UDIT CHAUHAN TEM G13
35 M000126 2141035 VAIBHAV PARMAR TEM G11
36 M000487 2141036 VINEET JAIN TEM G2
37 M001196 2141037 VISHAL JAINI TEM G7
1 M001975 2140001 ABHISHEK KAGRA SCM G9
 2 M000742 2140002 AFRAZ KHAN SCM G14
3 M001035 2140003 AGRAWAL SPARSH SANDEEP SCM G12
4 M000331 2140004 APANNA PRADHAN SCM G2
5 M000213 2140005 ARPAN HASMUKHBHAI PATEL SCM G2
6 M001051 2140006 ARPIT MEHTA SCM G2
7 M001422 2140007 ARVIND KUMAR NAYAK SCM G1
8 M002477 2140008 ASHUTOSH VIJAY JAISWAL SCM G10
9 M002299 2140009 DEEPAK SCM G13
10 M001826 2140010 GOURAB PANIGRAHI SCM G1
11 M001343 2140011 HARSHIT MISHRA SCM G4
12 M001278 2140012 HARSHIT SRIVASTAVA SCM G14
13 M001442 2140013 HIMANSHU KUMAR SCM G13
14 M001704 2140014 HIMANSHU SINGH SCM G4
15 M001272 2140015 IJAZ ALI N SCM G10
16 M000792 2140016 ILHE PRATIK SUKHADEV SCM G10
17 M000166 2140017 JAYANT SINGHAL SCM G14
18 M001732 2140018 KAUSHUIK N GAEKWAD SCM G5
19 M001293 2140019 KRIPA RANJAN SARKAR SCM G9
20 M002493 2140020 KSHITIJ ANAND SCM G14
21 M001317 2140021 LALIT KAUSHIK SCM G2
22 M000496 2140022 NIKHIL KUMAR SCM G12
23 M000535 2140023 PANKAJ KUMAR SCM G11
24 M002617 2140024 ROHIT TYAGI SCM G3
25 M001286 2140025 RUBY SCM G8
26 M001652 2140026 SAURAV MAURYA SCM G6
27 M001878 2140027 SHAILESHBHAI BHIL SCM G11
28 M000942 2140028 SHIVANGI PANDEY SCM G3
29 M002029 2140029 SHUBHAM SINGH SCM G3
30 M000100 2140030 SRAJAN VARSHNEY SCM G5
31 M001314 2140031 STUTI JAIN SCM G6
32 M002423 2140032 SUBHAJIT HAZRA SCM G9
33 M001728 2140033 SUDARSHAN SINGODIA SCM G13
34 M000192 2140034 SUDHANSHU MADHAV SCM G12
35 M002318 2140035 SUDHANSHU RAWAT SCM G11
36 M000761 2140036 SUDHANSHU SINGODIA SCM G13
37 M001846 2140037 SUMITABH PAUL SCM G7
38 M000175 2140038 SURAJIT MAJI SCM G9
39 M000628 2140039 URVASHI MISHRA SCM G12
 Roll No. Name of the Students

G1 2141027 Ravi Madheshiya

G1 2141024 Pradyum kumar
G1 2140007 Arvind Nayak
G1 2140010 Gourab Panigrahi

G2 2140005 ARPAN PATEL

G2 2140006 ARPIT MEHTA
G2 2140021 LALIT KAUSHIK
G2 2140004 APANNA PRADHAN
G2 2141036 VINEET JAIN

G3 2140029 Shubham Singh

G3 2140024 Rohit Tyagi
G3 2141006 Aniket Wasnik
G3 2141029 Shagun garg
G3 2140028 Shivangi Pandey

G4 2141010 Ashleena Sharley Aiven

G4 2141011 Bhanu Pratap Singh
G4 2141012 Devashree Kapse
G4 2141015 Goutam R Shet
G4 2140011 Harshit Mishra
G4 2140014 Himanshu Singh

G5 2140030 Srajan Varshney

G5 2141004 Alaric N Sangma
G5 2141003 Aditya Devgirkar
G5 2140018 Kaushik N Gaekwad
G5 2141032 Somesh Kumar Mohanty

G6 2141026 NIRALI RAJ

G6 2141016 Gyanda Sharma
G6 2140031 Stuti Jain
G6 2140026 Saurav Maurya
G6 2141018 Harish kesari

G7 2140037 Sumitabh Paul

G7 2141031 Shubham Sharma
G7 2141030 Shivam Sinha
G7 2141037 Vishal jaini
G7 2141001 Abhay Gupta
G7 2141023 Poonam shende
G8 2141014 Anurag Ajay Dubey
G8 2141007 Ankur
G8 2141008 Anukriti krishna
G8 2141009 Archishman Bhattacharya
G8 2140025 Ruby

G9 2140032 Shubhajit Hazra

G9 2141002 Adhip Banik
G9 2140019 Kripa Ranjan Sarkar
G9 2140038 Surajit Maji
G9 2141013 Dhananjay Kumar Mahato
G9 2140001 Abhishek Kagra

G10 2140008 Ashutosh Jaiswal

G10 2140016 Pratik Ilhe
G10 2141005 Aman Verma
G10 2141021 Vaibhav Jaydeo Khobragade
G10 2141025 Praveen Kumar
G10 2140015 Ijaz Ali

G11 2141019 Hemant Sanvriya

G11 2140023 Pankaj kumar
G11 2140035 Sudhanshu Rawat
G11 2141022 Piyush Choudhary
G11 2140027 Shaileshbhai Bhil
G11 2141035 Vaibhav Parmar

G12 2140034 Sudhanshu madhav

G12 2141017 Hanshul Dayma
G12 2141028 Harnisha Sarkar
G12 2140039 Urvashi Mishra
G12 2140022 Nikhil Kumar
G12 2140003 Sparsh Aggrawal

G13 2140036 sudhanshu singodia

G13 2141034 Udit Chauhan
G13 2140033 sudarshan singodia
G13 2141033 Swati Amrit
G13 2140009 Deepak
G13 2140013 Himanshu Kumar

G14 2140020 Kshitij Anand

G14 2140017 Jayant Singhal
G14 2140012 Harshit Srivastava
G14 2140002 Afraz Khan
G14 2141020 Jayaraj Trivedi
Educational Qualification

B.voc hons in Retail & logistics management

Bsc(Physics)
B.tech(csc Engg)
B.tech (mech Engg)

B.E. ELECTRICAL
B.TECH METALLURGY
B.COM
B.TECH MECHANICAL
B.COM

B.Tech (Mechanical Engineering)

B.com(H)
B.E. (Electrical Engineering)
B.Tech (Mechanical Engineering)
B.com

B.Tech (Electrical and Electronics Engg.)

B.Sc ( Hons.) Mathematics
B. E ( Civil Engineering )
B. E ( Mechanical Engineering )
Bachelor Of Commerce
B. Tech ( Mechanical Engineering )

B.E (Electrical and electronics engg.)

B.com (Hons)
B.tech (mechanical)
Bsc(math, electronics, computer science)
B. Tech (Electrical and Electronics Engineering)

B E (E&C)
B.Com
BBE
B.Com

B.Tech (Mech. engg)

BBA
B.Tech (Civil Engg)
B.E(Mech.Engg)
BBA
Bsc
BBA(General)
B.Tech(EEE)
B.Tech(Civil)
B.tech(Mechanical)
BA(Entrepreneurship & Economics)

B.Tech Electrical
B.Tech Mechanical
BSc Mathematics
BBA
B. Tech Electronics and Communication
BBE

B.Tech
Bsc (Agriculture)
BBA
MSC(Applied Mathematics)
B.Tech (Electrical)
B.Tech

B. tech (Dairy Technology)

b.com
Bcom
Btech (mechanical)
B.tech ( Chemical Eng.)
B.Com (Hons)

B.tech (mechanical engg.)

B.com(H)
BE(Metallurgy)
B.Tech.( Electrical Engg.)
B.B.A
Bsc IT(Information TEchnology)

BTech Electrical
BTech Mechanical
BTech Mechanical
B.Sc.(Mathematics)

BBA

B.Tech
B.A (Eco)
BMS
B.com
BMS
New Roll Programme
No. Specialization Sr.No
Name
2141001 TEM 1
ABHAY GUPTA
2141002 TEM 2
ADHIP BANIK
2141003 TEM 3
ADITYA DEVGIRKAR
2141004 TEM 4
ALARIC N. SANGMA
2141005 TEM 5
AMAN VERMA
2141006 TEM 6
ANIKET ABHAY WASNIK
2141007 TEM 7
ANKUR
2141008 TEM 8
ANUKRITI KRISHNA
2141009 TEM 9
ARCHISMAN BHATTACHARYYA
2141010 TEM 10
ASHLEENA SHARLEY AIVEN
2141011 TEM 11
BHANU PRATAP SINGH
2141012 TEM 12
DEVASHREE ASHOK KAPSE
2141013 TEM 13
DHANANJAY KUMAR MAHATO
2141014 TEM 14
DUBEY ANURAG AJAYKUMAR
2141015 TEM 15
GOUTAM R SHET
2141016 TEM 16
GYANDA SHARMA
2141017 TEM 17
HANSHUL DAYMA
2141018 TEM 18
HARISH KESARI
2141019 TEM 19
HEMANT SANVRIYA
2141020 TEM 20
JAYRAJ TRIVEDI
2141021 TEM 21
KHOBRAGADE VAIBHAV JAYDEO
2141022 TEM 22
PIYUSH CHOUDHARY
2141023 TEM 23
POONAM SHENDE
2141024 TEM 24
PRADYUM KUMAR
2141025 TEM 25
PRAVEEN KUMAR
2141026 TEM 26
RAJ NIRALIBEN RASIKBHAI
2141027 TEM 27
RAVI MADHESHIYA
2141028 TEM 28
SARKAR HARNISHA RAJUBHAI
2141029 TEM 29
SHAGUN GARG
2141030 TEM 30
SHIVAM SINHA
2141031 TEM 31
SHUBHAM SHARMA
2141032 TEM 32
SOMESH KUMAR MOHANTY
2141033 TEM 33
SWATI AMRIT
2141034 TEM 34
UDIT CHAUHAN
2141035 TEM 35
VAIBHAV PARMAR
2141036 TEM 36
VINEET JAIN
2141037 TEM 37
VISHAL JAINI
SCM 38
2140001 ABHISHEK KAGRA
SCM 39
2140002 AFRAZ KHAN

2140003 AGRAWAL SPARSH SANDEEP SCM 40

SCM 41
2140004 APANNA PRADHAN
SCM 42
2140005 ARPAN HASMUKHBHAI PATEL
SCM 43
2140006 ARPIT MEHTA

2140007 ARVIND KUMAR NAYAK SCM 44

2140008 ASHUTOSH VIJAY JAISWAL SCM 45

SCM 46
2140009 DEEPAK
SCM 47
2140010 GOURAB PANIGRAHI
SCM 48
2140011 HARSHIT MISHRA

2140012 HARSHIT SRIVASTAVA SCM 49

SCM 50
2140013 HIMANSHU KUMAR
SCM 51
2140014 HIMANSHU SINGH
 SCM 52
2140015 IJAZ ALI N
SCM 53
2140016 ILHE PRATIK SUKHADEV
SCM 54
2140017 JAYANT SINGHAL

2140018 KAUSHUIK N GAEKWAD SCM 55

SCM 56
2140019 KRIPA RANJAN SARKAR
SCM 57
2140020 KSHITIJ ANAND
SCM 58
2140021 LALIT KAUSHIK

2140022 NIKHIL KUMAR SCM 59

SCM 60
2140023 PANKAJ KUMAR
SCM 61
2140024 ROHIT TYAGI

2140025 RUBY SCM 62

SCM 63
2140026 SAURAV MAURYA
SCM 64
2140027 SHAILESHBHAI BHIL
SCM 65
2140028 SHIVANGI PANDEY

2140029 SHUBHAM SINGH SCM 66

SCM 67
2140030 SRAJAN VARSHNEY
SCM 68
2140031 STUTI JAIN
SCM 69
2140032 SUBHAJIT HAZRA

2140033 SUDARSHAN SINGODIA SCM 70

2140034 SUDHANSHU MADHAV SCM 71

SCM 72
2140035 SUDHANSHU RAWAT
SCM 73
2140036 SUDHANSHU SINGODIA
SCM 74
2140037 SUMITABH PAUL

2140038 SURAJIT MAJI SCM 75

SCM 76
2140039 URVASHI MISHRA
Company Name

ACC Ltd.
Adani Green Energy Ltd.
Ambuja Cements Ltd.
Apollo Hospitals Enterprise Ltd.
Ashok Leyland Ltd.
Asian Paints Ltd.
Aurobindo Pharma Ltd.
Bajaj Auto Ltd.
Berger Paints India Ltd.
Bharat Forge Ltd.
Bharat Petroleum Corporation Ltd.
Bharti Airtel Ltd. 0.24
Biocon Ltd.
Bosch Ltd.
Britannia Industries Ltd.
Cipla Ltd.
Coal India Ltd.
Colgate-Palmolive (India) Ltd.
Crompton Greaves Consumer Electricals Ltd.
Dabur India Ltd.
Divis Laboratories Ltd.
Dr. Reddys Laboratories Ltd.
Eicher Motors Ltd.

Godrej Consumer Products Ltd.

Havells India Ltd.
Hero MotoCorp Ltd.
Hindalco Industries Ltd.
Hindustan Petroleum Corporation Ltd. 0.59
Hindustan Unilever Ltd. 0.11
Indian Oil Corporation Ltd.
ITC Ltd.
JSW Steel Ltd.
Jubilant FoodWorks Ltd.
Larsen & Toubro Ltd.
Lupin Ltd.
Coromandel International Ltd
Marico Ltd.
Maruti Suzuki India Ltd.
Motherson Sumi Systems Ltd.
MRF Ltd.
Nestle India Ltd. 0.14
NTPC Ltd. 0.38
Page Industries Ltd. 0.59
PI Industries Ltd.
Pidilite Industries Ltd.
Piramal Enterprises Ltd.
Power Grid Corporation Of India Ltd.
Reliance Industries Ltd.
Shree Cement Ltd.
Siemens Ltd.

Sun Pharmaceutical Industries Ltd.

Tata Consumer Products Ltd.
Tata Motors Ltd.
Tata Power Company Ltd. 0.18
Tata Steel Ltd.
Titan Company Ltd.
Torrent Pharmaceuticals Ltd. 0.11
TVS Motor Company Ltd.
Ultratech Cement Ltd.
UPL Ltd.
Vedanta Ltd.
Voltas Ltd.
Tata Chemicals Ltd.
FDC Ltd.
Deepak Nitrite Ltd
Castrol Ltd.
J K Cements Ltd.
Birla Corporation Ltd. 0.18
Kansai Nerolac Ltd.

Steel Authority of India (SAIL)

Indian Hotels Ltd.
Jyothy Ltd
Emami Ltd
Bajaj Consumer Ltd.
J B Chemicals
EID Parry
Screener.in
M&M Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20
Sales + 26,185 27,159 26,041 23,936 19,430 16,315
Operating Profit 3,694 3,989 3,435 3,310 2,640 1,577

Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15

Share Capital + 283 294 295 295 295 296
Reserves 9,865 13,990 16,409 19,666 23,012 25,561
Borrowings 14,628 17,047 23,121 28,711 35,167 37,911
Other Liabilities + 10,839 19,005 23,623 27,460 29,415 30,608
Total Liabilities 35,615 50,337 63,448 76,131 87,889 94,376
Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15
Debt/Equity 1.44 1.19 1.38 1.44 1.51 1.47
PBIT (computed value) 5154 5650 5984 7877 8774 7470
Interest 1,121 1,135 1,800 2,297 2,954 3,157
PBT 4,033 4,515 4,184 5,580 5,820 4,313
ROTA (Reward for Business R 14.47% 11.22% 9.43% 10.35% 9.98% 7.92%
ROE 39.74% 31.61% 25.05% 27.95% 24.97% 16.68%
Reward for Financial Risk 25.27% 20.38% 15.62% 17.61% 14.99% 8.77%

Historical trend of M&M data shows when the business risk is increasing (ROTA has
declined), the company added additional finanical risk (D/E increased over the years).

https://docs.google.com/spreadsheets/d/1mr0An4_EwcWK9jFR0FzYUWJypwSzyKPYbb7A1q-IiIk/edit?usp=sharing
High Low
Business Risk
Financial Risk

A B C D E
Equity 100 80 60 40 20
Loan @ 10% 0 20 40 60 80
Total Cap 100 100 100 100 100

PBIT 20 20 20 20 20
Interst 0 2 4 6 8
PBT 20 18 16 14 12

ROTA 20% 20% 20% 20% 20% Reward for business risk
ROE 20% 23% 27% 35% 60%

D/E 0.00 0.25 0.67 1.50 4.00 Financial Risk

0% 3% 7% 15% 40% Reward for Financial Risk
 0% 3% 7% 15% 40% =(ROTA-Interst Rate)*(D/E)

Division X Expansion
Opportunity
Total Capital (Total Assets) 100 60 160
PBIT 40 20 60
ROTA 40% 37.50%

PBIT 40 20 60
Less: Capital Charge (15% on Cap 15 24
Economic Value Added (EVA) 25 36
Stren Stwart
 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Average Std Dev
11,969 19,227 21,626 21,456 19,172 21,470 21,165.50 4,388.00
2,060 3,505 2,523 3,399 987 4,892 3,000.92 1,089.49

Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21

270 271 543 544 554 555
26,222 29,467 36,232 39,439 39,415 41,027
41,553 48,762 55,898 70,848 82,092 80,087
31,806 35,296 43,696 51,057 43,655 43,300
99,852 113,835 136,369 161,889 165,716 164,968
Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
1.57 1.64 1.52 1.77 2.05 1.9260
9040 9998 14313 13892 7676 9260
3,368 3,648 3,987 5,021 6,021 6,102 5,504
5,672 6,350 10,326 8,871 1,655 3,158 5,075
9.05% 8.78% 10.50% 8.58% 4.63% 5.6132%
21.41% 21.35% 28.08% 22.19% 4.14% 7.5946%
12.36% 12.57% 17.58% 13.61% -0.49% 1.98%

asing (ROTA has

d over the years).

it?usp=sharing

eward for business risk

nancial Risk
eward for Financial Risk
(ROTA-Interst Rate)*(D/E)
Co-efficient of Variation
0.2073
0.3631
What is the compound value (future Value) of Rs. 100000 invested today at the end of 5 years at 12% interest rate?
FV = PV * (1+r)^n 176234.17
=FV(%,N,0,PV,1) 176234.17

Millionaire Bond
PV 10400 10400
Interest 16.50% 3.88% 15.50%
Period 30 120
FV 1015807 996226

What is the compound value (future Value) of recurring deposit of Rs. 10000 invested per month at the end of 5 years at 12%

Future value of annuity due C * [(1+r)^n-1]/r * (1+r)

₹824,863.67

What is the compound value (future Value) of recurring deposit of Rs. 10000 invested per month at the end of 20 years at 12%

₹9,991,479.19
Pension company offers either 1000000 today or 80000 per year pension for 30 years starting at the end of year
Lump sum 1000000
or
Pension per year 80000 for 30 years

PV of 30 pension (₹644,414.72)

Present Value FV/(1-r)^n

Suppose you plan to send your daughter for higher education 20 years from now and you expect it would cost
Rs. 40 lakhs. How much to save today if the interest rate is 8%?

Present value 858192.83

Suppose you plan to send your daughter for higher education 20 years from now and you expect it would cost
Rs. 40 lakhs. How much to save per year if the interest rate is 8%?

Present value of Annuity and annuity due

=4000000/((1.08^20)/8%) 87408.84

(₹87,408.84) based on annuity (investment at the end of first year)

 (₹80,934.11) based on annuity due (investment today)

Perpetuity
If SBI issues a perpetual bond with a face of value Rs. 10000 and interest rate is 8%, what is the fair value of
the bond if the current interest rate is 6%?

Fair value of the bond is equal to Present Value of Rs. 800 that we get interest for perpetual
PV of perpetuity = C/r 13333.33

Growing perpetuity

If Yes bank issues a growing perpetual bond with face of Rs. 10000 and interest rate is 4% and interest
amount is increasing at 2%, what is the fair value if the current interest rate is 5%

Interest 1 400.00
Interest 2 408.00
Interest 3 416.16

Interest 1000 ### 0.0000000000

PV of Growting Perpetuity. = C1/(r-g) 13333.33

Financial Planning
Current Age 25
Investment period 35
Life after retirement 40
including spouse
Interest rate 8%
Inflation rate (long-term) 4%

Pension required per

month for a simple normal 30000
life
- per year 360000
How much I need to save every year starting from today for the next 35 years such
that I get inflation adjusted pension of Rs. 3.60 lakhs per year for next 40 years
starting from age 61 years.

Pension Corpus Required 28772839

on retirement
Amount to be saved every year for next 35 ye (₹154,607.77) using PMT
Saving per month (₹12,883.98)
Pension Time Pension (nominal)PV of Pension on retirement
1 1477416 1367978
2 1536512 1317312
3 1597973 1268522
4 1661892 1221540
5 1728367 1176298
6 1797502 1132731
7 1869402 1090778
8 1944178 1050379
9 2021945 1011476
10 2102823 974014
11 2186936 937939
12 2274414 903201
13 2365390 869749
14 2460006 837536
15 2558406 806516
16 2660742 776645
17 2767172 747881
18 2877859 720181
19 2992973 693508
20 3112692 667823
21 3237200 643088
22 3366688 619270
23 3501355 596334
24 3641409 574248
25 3787066 552979
26 3938549 532499
27 4096090 512777
28 4259934 493785
29 4430331 475496
30 4607545 457885
31 4791846 440927
32 4983520 424596
33 5182861 408870
34 5390176 393727
35 5605783 379145
36 5830014 365102
37 6063214 351580
38 6305743 338558
39 6557973 326019
40 6820292 313944

Op Balance Saving Interest Withdrawal Closing Balance

0 0 154608 12369 0 166976
1 166976 154608 25727 0 347311
2 347311 154608 40153 0 542072
3 542072 154608 55734 0 752414
4 752414 154608 72562 0 979584
5 979584 154608 90735 0 1224927
6 1224927 154608 110363 0 1489898
7 1489898 154608 131560 0 1776066
8 1776066 154608 154454 0 2085127
9 2085127 154608 179179 0 2418914
10 2418914 154608 205882 0 2779403
11 2779403 154608 234721 0 3168732
12 3168732 154608 265867 0 3589207
13 3589207 154608 299505 0 4043320
14 4043320 154608 335834 0 4533762
15 4533762 154608 375070 0 5063439
16 5063439 154608 417444 0 5635491
17 5635491 154608 463208 0 6253307
18 6253307 154608 512633 0 6920547
19 6920547 154608 566012 0 7641168
20 7641168 154608 623662 0 8419437
21 8419437 154608 685924 0 9259969
22 9259969 154608 753166 0 10167743
23 10167743 154608 825788 0 11148139
24 11148139 154608 904220 0 12206966
25 12206966 154608 988926 0 13350500
26 13350500 154608 1080409 0 14585516
27 14585516 154608 1179210 0 15919334
28 15919334 154608 1285915 0 17359857
29 17359857 154608 1401157 0 18915622
30 18915622 154608 1525618 0 20595848
31 20595848 154608 1660036 0 22410492
32 22410492 154608 1805208 0 24370308
33 24370308 154608 1961993 0 26486909
34 26486909 154608 2131321 0 28772838
1 28772838 0 2301827 1477416 29597249
2 29597249 0 2367780 1536512 30428517
3 30428517 0 2434281 1597973 31264826
4 31264826 0 2501186 1661892 32104120
5 32104120 0 2568330 1728367 32944082
6 32944082 0 2635527 1797502 33782106
7 33782106 0 2702569 1869402 34615273
8 34615273 0 2769222 1944178 35440316
9 35440316 0 2835225 2021945 36253596
10 36253596 0 2900288 2102823 37051061
11 37051061 0 2964085 2186936 37828209
12 37828209 0 3026257 2274414 38580052
 13 38580052 0 3086404 2365390 39301066
14 39301066 0 3144085 2460006 39985146
15 39985146 0 3198812 2558406 40625552
16 40625552 0 3250044 2660742 41214853
17 41214853 0 3297188 2767172 41744870
18 41744870 0 3339590 2877859 42206601
19 42206601 0 3376528 2992973 42590155
20 42590155 0 3407212 3112692 42884676
21 42884676 0 3430774 3237200 43078250
22 43078250 0 3446260 3366688 43157822
23 43157822 0 3452626 3501355 43109093
24 43109093 0 3448727 3641409 42916411
25 42916411 0 3433313 3787066 42562658
26 42562658 0 3405013 3938549 42029122
27 42029122 0 3362330 4096090 41295361
28 41295361 0 3303629 4259934 40339056
29 40339056 0 3227124 4430331 39135849
30 39135849 0 3130868 4607545 37659172
31 37659172 0 3012734 4791846 35880060
32 35880060 0 2870405 4983520 33766944
33 33766944 0 2701356 5182861 31285439
34 31285439 0 2502835 5390176 28398098
35 28398098 0 2271848 5605783 25064163
36 25064163 0 2005133 5830014 21239282
37 21239282 0 1699143 6063214 16875211
38 16875211 0 1350017 6305743 11919484
39 11919484 0 953559 6557973 6315070
40 6315070 0 505206 6820292 -16

IFCI Issued a Millionaire bond collected Rs. 10400 for 30 years and agree to pay Rs. 10 lakhs at
the end of 30 years. What is interest Rate?

Using Rate Function 16.44% annual compounding

3.88% quarterly compounding 15.51% per year
1.28% monthly compounding 15.32% per year

Continuous Compound Rate

FV of Rupee at continous compound rate e^(rt)
2.71828183
FV of One Rupee at 12% interest for 30 years continous compound 36.5982
FV of One Rupee at 12% interest for 30 years annual compound 29.9599
FV of One Rupee at 12% interest for 30 years quarterly ompound 34.7110
FV of One Rupee at 12% interest for 30 years monthly ompound 35.9496
FV of One Rupee at 12% interest for 30 years weekly ompound 36.4468
% interest rate?

the end of 5 years at 12% interest rate?

the end of 20 years at 12% interest rate?

e end of year

at the end of first year)

losing Balance
Future Value of Rupee =FV()
Future Value of Annuity =PV()
Present value of Rupee =PMT()
Present value of Annuity =RATE()
Continuous compound rate
Present value of Perpetuity
Present value of Growing Perpetuity

What is the future value of Rs. 1000 invested at 12% per annum 9646.2931
invested for 20 years (interest compounded annually)?
What is the future value of Rs. 1000 invested at 12% per annum 10640.8906
invested for 20 years (interest compounded quarterly)?

What is the future value of Rs. 1000 invested at 12% per annum
invested for 20 years (interest compounded continuously)? 11023.1764 11023.1764

For the target amount of Rs. 10 lakhs at the end of 10 years, how
much one has to invest today if the interest rate is 8% and 463193.49
compounded annually?

For the target amount of Rs. 10 lakhs at the end of 10 years, how -63916.19
much one has to invest every year starting from today if the
interest rate is 8% and compounded annually?

Ram plans to borrow Rs. 50 lakhs to buy a flat. Bank charges an

interest rate of 8% per annum (0.75% per month) and the duration
of the loan is 360 months (30 years). How much EMI Ram has to -40231.13
pay every month to repay the loan with interest? The first
instalment is payable at the end of the first month after taking the
loan.

Asha is buying a car at a price of Rs. 600000. The leasing company

asked her to pay Rs. 13000 per month for 60 months. The first
instalment is payable at the end of first month. What is the 0.9040% 10.85%
monthly interest rate that the leasing company charges? Hint: Use
RATE Function

A bank offers annual interest rate of 8%. How long does it take to
double the invested amount? Interest is compounded annually.
(Hint: Use trial and error to find the years to double the 8% 9.0000
investment).
What is the fair value of a bond that offers an interest amount of
Rs. 100 at the end of the first year and then interest increases at 5000.0000
the rate of 4% per year forever. The current market interest rate is
6%.

You have won a lottery that offers either Rs. 10 lakhs today or Rs. 3 -1250959.63 It is better take the lottery amount at the
lakhs per year starting from today for five years. Your opportunity
interest rate is 10%. Which one will you choose?
300000.0000 300000.0000
 0.0000 1.0000
300000.0000 272727.2727
1250959.63

Let us assume today date is 1st January 2021

On January 1, 2016, the GoI issued a bond at a coupon rate of 8%,
face value of Rs. 1000, maturity period of 10 years and redeemed
at par
CuLet us assume today date is 1st January 2021
On January 1, 2016, the GoI issued a bond at a coupon rate of 8%,
face value of Rs. 1000, maturity period of 10 years and redeemed
at par
Current interest rate for a five-year bond is 6%

Time Future Cash Flo PV of FCF@ 6%

1 80.0000 75.4717
2 80.0000 71.1997
3 80.0000 67.1695
4 80.0000 63.3675
5 1080.0000 807.0388
Fair value of the bond or market price 1084.2473

Suppose you bought bond today at Rs. 1084.25 and within few
minutes the RBI changes interest rate and the current interest rate
in the market is 5%. Suppose you decide the sell the bond. How
much you will get?

Time Future Cash Flo PV of FCF@ 5%

1 80.0000 76.1905
2 80.0000 72.5624
3 80.0000 69.1070
4 80.0000 65.8162
5 1080.0000 846.2083
The price of the bond will increase from Rs. 1084.25 to Rs. 1129.88 1129.8843
when thePrinciple:
General interest Interest
rate in the market
Rate declines
and bond prices are inversely
related

Yield to Maturity
If I hold the bond till its maturuity, what is the effective interest
rate that I will earn from this investment 5.9999%
0 -1084.25
1 80.00 75.4717418
2 80.00 71.1997976
3 80.00 67.1696592
4 80.00 63.3676397
5 1080.00 807.0411616
YTM is equal to the rate at which the PVCIF=PVCOF 5.9999% 1084.2500000
Therefore, YTM is equal to IRR of the Cash Flows =IRR(B46:B51)

Bond A Bond B
Time to Maturity (years) 5 5.25
Face Value 1000 5000
Coupon 6% 9%
Maturity Value At Par At premium of 200
Current Market Price 1100 5400
Which bond you will select?
Ans: The one which gives higher YTM
0 -1100 -5400
1 60 450
2 60 450
3 60 450
4 60 450
5 1060 450
5.25 5312.5

YTM 3.77% 7.74%

Preferred Bond

Duration for Bond A Cash Flow PV of Cash Flow at 4%

1 60 57.6923076923077
2 60 55.4733727810651
3 60 53.3397815202549
4 60 51.2882514617835
5 1060 871.242733164913
1089.03644662032

Duration 4.4902

Duration for Bond B CF PV of CF at 4%

1 450 432.6923
2 450 416.0503
3 450 400.0484
4 450 384.6619
5 450 369.8672
5.25 5312.5 4323.8828
6327.2028
 Duration 4.5128

Conclusion: Bond A is riskier to the changes in the interest Rates

It means if the interest rate in the market increases from 4% to
say 5%, both bond prices will decline but Bond B will suffer more

Exercise
Face Value :1000; Coupon 7%; Maturity 10 years; Redeemed at
Par; Current Interest Rate is 10%
Find the duration of the bond
Time CF PV of CF @ 10%
1 70 63.6364
2 70 57.8512
3 70 52.5920
4 70 47.8109
5 70 43.4645
6 70 39.5132
7 70 35.9211
8 70 32.6555
9 70 29.6868
10 1070 412.5313
815.6630
Duration of the Bond 7.2186

What is the duration of 30 years Zero-coupond bond? Issue price

10400; Maturity Value is 10000000.
Duration of Zero-coupon bond is always equal to maturity period
of the bond

Duration of Sinking Fund and Normal Bond Duration

Bond A: Face Value Rs. 10000, Coupon 10%; Period 10 years; 6.36
repayment 3000 at the end of 8th year, 3000 at the end of 9th
year and 4000 at the end of 10th year
Bond B: Face Value Rs. 10000, Coupon 10%; Period 10 years; 6.76
repayment 10000 at the end of 10th year
CF PV CF @ 10%
1 1000 909.090909090909
2 1000 826.446280991735
3 1000 751.314800901578
4 1000 683.013455365071
5 1000 620.921323059155
6 1000 564.473930053777
 7 1000 513.158118230706
8 4000 1866.02952083893
9 3700 1569.16118797819
10 4400 1696.39047348994
10000
Duration 6.36461303119

CF PV CF @ 10%
1 1000 909.090909090909
2 1000 826.446280991735
3 1000 751.314800901578
4 1000 683.013455365071
5 1000 620.921323059155
6 1000 564.473930053777
7 1000 513.158118230706
8 1000 466.507380209733
9 1000 424.097618372485
10 11000 4240.97618372485
10000
Duration 6.75902381628

Find the market price of the two bonds if the interest rate changes
from 10% to 12%? Bond A Bond B
Current Price 10000 10000
Price when the interest rate changes from 10% to 12%
 2.7183 e^rt

600000 180000 13000

1.9990 9.0000

take the lottery amount at the rate of Rs. 3 lakhs per year for 5 years starting from today

300000.0000 300000.0000 300000.0000

 2.0000 3.0000 4.0000
247933.8843 225394.4403 204904.0366

1084.2473 Current Yield 7.38%

=NPV(6%,B27:B31)

Current Yield Interest Amount/Current Market Price

Current Yield 7.08%

 7.74%

417.6722
387.6668
359.8169
333.9678
309.9757
3591.8637
5400.9631

PV CF * Time
57.692307692
110.94674556
160.01934456
205.15300585
4356.2136658
4890.0250695

years

PVCF * Time
432.6923
832.1006
1200.1451
1538.6475
1849.3360
22700.3846
28553.3061
PVCF * Time
63.6364
115.7025
157.7761
191.2438
217.3225
237.0791
251.4475
261.2441
267.1815
4125.3132
5887.9465

909.09090909
1652.892562
2253.9444027
2732.0538215
3104.6066153
3386.8435803
3592.1068276
14928.236167
14122.450692
16963.904735
63646.130312

909.09090909
1652.892562
2253.9444027
2732.0538215
3104.6066153
3386.8435803
3592.1068276
3732.0590417
3816.8785654
42409.761837
67590.238163
 Bond A Bond B Bond A Bond B
Face Value 1000 1000 0 -950 -1150
Coupon 8% 12% 1 80 120
Period 5 7 2 80 120
Market Price 950 1150 3 80 120
Maturity Value 1000 1050 4 80 120
5 1080 120
Yield 8.42% 10.43% 6 120
Yield to Maturity 7 1170
DURATION YTM 9.30% 9.50%

Duration CF PV CF PVCF*Time CF PVCF

1 80 73.1961757 73.1961757 1 120 109.5849
2 80 66.9710018 133.942004 2 120 100.0737
3 80 61.2752652 183.825795 3 120 91.3881
4 80 56.0639384 224.255754 4 120 83.4563
5 1080 692.493619 3462.46809 5 120 76.2129
6 6 120 69.5982
7 7 1170 619.6861
950 4077.6878 1150

Duration 4.2923 5.2645

Modified Duration (MD) = D/(1+YTM 3.9273 4.8076
Why Duration of Bond B is more than Bond A but at decreasing rate
1. Longer Maturity, higher the duration
2. Higher the coupon, lower the duration
3. Higher the YTM, lower the duration
4. Bond redeeming at premium have lower duration

YTM Price of B (A) Price of B (B)

9.3% and 9.5% 950 1150
10.3% and 10.5% 913.47 1096.7
% change in price 3.85% 4.63%

Spot Rate (Excluded for the EXAM)

1 year Rate 8%
2 year Rate 9%
3 year Rate 10%
What is spot rate of 1 year and 2 year?

Assuming you are investing in two year bond, your cash flows -1000
1 90 97.2 0 100
2 1090 1090 1187.2 100
 1187.2 8.96% 1100
IRR of Zero Coupon Bond
Spot Rate for 1 year 8.00%
Spot Rate for 2 year 8.96%
Spot Rate for 3 year 9.88%

Spot rate is computed by converting interest paying bond into zero coupon bond and then computing IRR of the ZCB.

Valuation of Equity or Common Stock

PV of Growing Perpetuity C1/(r-g)

Cash Flow from Equity

1 Dividend as long as you are holding the equity
2 Capital Appreication and it is equal the dividend that you are foregoing
Value of equity Present value of all future dividend

To value a equity stock

(a) Expected dividend for the next year C1 Last year Dividend (1+Growth Rate of the Dividen
(b) Growth rate of the dividend g Sustainable Growth Rate for a matured company
(c) Discount Rate r Cost of Equity (for the time being, let us assume c

Assumptions
Company is in matured industry
No major growth rate or expansion
No Major cost saving
Only source of growth is retained profit
Growth rate is lower than cost of equity
M&M 2010 2011 2012 2013 2014 2015
EPS in Rs 21.43 25.08 25.46 33.38 37.89 25.26
Dividend Payout % 22% 22% 24% 19% 18% 23%
Dividend per share A 4.7146 5.52 6.11 6.34 6.82 5.81
Retained Profit Ratio 78% 78% 76% 81% 82% 77%
ROE

Last year Dividend (1+Growth Rate of the Dividend) C1 8.42

Sustainable Growth Rate for a matured company g = ROE*RE 6.93%
Cost of Equity (for the time being, let us assume cost of equity is equal to 1 r 15%

Value of M&M Stock as per Dividend Discount Model 104.32

Current Market Price of M&M (Feb 7, 2022) 834.00

Powergrid Corporation
 2011 2012 2013 2014 2015 2016
EPS in Rs 4.33 5.35 6.99 6.52 7.23 8.54
Dividend Payout % 30% 30% 31% 30% 21% 20%
Dividend per share A 1.30 1.61 2.17 1.96 1.52 1.71
Retained Profit Ratio 70% 70% 69% 70% 79% 80%
ROE

Last year Dividend (1+Growth Rate of the Dividend) C1 8.03

Sustainable Growth Rate for a matured company g = ROE*RE 10.79%
Cost of Equity (for the time being, let us assume cost of equity is equal to 1 r 15%

Value of Powergrid Stock as per Dividend Discount Model 190.90

Current Market Price of Powergrid (Feb 7, 2022) 212.00

DDM CMP
HUL 470 2291
Havellis 446 1198
Torrent 1414 2618
Corromandel Not Applicable 798
Coal India 228 162
Castrol
Utratech 965 7431
J B Chemicals
Devis Lab 2657 4238
BPCL 76 372
 PVCF*Time Maturity value of Interest -1150
109.5849 206.902049 0
200.1474 188.944477 0
274.1642 172.545489 0
333.8250 157.569813 0
381.0643 143.893915 0
417.5889 131.404984 0
4337.8024 1170 2171.26073
6054.1772 2171.26073 9.50%

ecreasing rate

-1000
118.81 0
108 0
 1100 1326.81
1326.81 9.88%

computing IRR of the ZCB.

dend (1+Growth Rate of the Dividend)

rowth Rate for a matured company ROE * Retained Profit Ratio
(for the time being, let us assume cost of equity is equal to 15%)

2016 2017 2018 2019 2020 2021

25.35 29.77 60.41 42.76 1.02 14.58 97.2
21% 22% 11% 17% 205% 54%
5.32 6.55 6.65 7.27 2.09 7.87
79% 78% 89% 83% 46% 77%
9% (average ROE of last five year)
 2017 2018 2019 2020 2021
10.68 11.76 14.38 15.85 17.26
31% 33% 43% 47% 42% 33%
3.31 3.88 6.18 7.45 7.25 115.07
69% 67% 57% 53% 58% 67%
16% ROE of average of last five years

assumed value
of last five year)
M&M For Assignment 1 Mar-10 Mar-11 Mar-12 Mar-13
Growth Rate of Sales 26.58% 61.13% 15.65%
Sales + 29,124 36,864 59,399 68,693
Expenses + 26,210 30,762 52,140 59,578
Operating Profit 2,914 6,102 7,259 9,116
OPM % 10% 17% 12% 13%
Other Income 3,113 521 526 841
Interest 1,121 1,135 1,800 2,297
Depreciation 874 972 1,802 2,080
Profit before tax 4,033 4,515 4,184 5,580
Tax % 29% 29% 34% 35%
Net Profit 2,479 3,080 3,127 4,099
EPS in Rs. (PAT/No of shares) 21.43 25.08 25.46 33.38
Growth Rate of EPS 17.03% 1.52% 31.11%
Dividend Payout % 22% 22% 24% 19%
Dividend per share 4.7146 5.5176 6.1104 6.3422
Dividend Growth Rate 17.03% 10.74% 3.79%
1+Dividend Growth Rate 117.03% 110.74% 103.79%
If the new business ROE is equal to cost of equity, then the value of the equity is equal to the present Dividend Discount Mode
If the new business ROE is greater than cost of equity, then the value of the equity is more than present Dividend Discount M
If the new business ROE is less than cost of equity, then the value of the equity is less than present Dividend Discount Model v

Fair value of the firm.= Existing business value + or - new business value

EPS 1 10
Dividend Amount 8 80%
Retained Profit 2 20%
Cost of Equity 10%
Normal Growth Rate 2% Cost of Equity * RE Ratio
Value of Existing Business 100 100

Value of New Business PVGO

When the firm invest the retained profit NPV of new Projects 2 33.33
at 20% (which is more than cost of equity)
When the firm invest the retained profit NPV of new Projects -1 -11.11
at 5% (which is less than cost of equity)
When the firm invest the retained profit NPV of new Projects -0.4 -4.76
at 8% (which is less than cost of equity)
When the firm invest the retained profit NPV of new Projects -0.2 -2.44
at 9% (which is less than cost of equity)
When the firm invest the retained profit NPV of new Projects 0 0
at 10% (which is less than cost of equity)

Capital Budgeting

A business is investing 100 million today and expected to get 15 million in year 1, 20 million in year 2 and 25 million in Year 3,
Is this investment financially justified if the cost of capital is equal to 15%?

Time CF PV CF @ 15%
0 -100 -100.00
1 15 13.04
2 20 15.12
3 25 16.44
4 25 14.29
5 25 12.43

Net Present Value (NPV) -28.67 Conclusion: Since NPV is less than zero, the
PV of Cash Inflows 71.33
PV of Cash Outflow 100.00
Net Present Value -28.67

Time CF PV CF @ 15%
0 -70 -70.00
1 15 13.04
2 20 15.12
3 25 16.44
4 25 14.29
5 25 12.43

Net Present Value (NPV) 1.33 Conclusion: Since NPV is greater than zero,
Internal Rate of Return
IRR is the rate which NPV is Zero or PVCIF=PVCOF 15.73% Conclusion: If IRR >= Discount Rate or Cost
IRR has more communication value

IRR Issue 1 PV @ 15% PV @ 45.27% PV @ -17.44%

0 -3000 -3000.00 -3000.00 -3000.00
1 3500 3043.48 2409.33 4239.10
2 4000 3024.57 1895.48 5867.74
3 -4000 -2630.06 -1304.81 -7106.84
NPV 437.99 0.00 0.00
By applying NPV, the project is financially vi
IRR 1 45.27% By applying IRR, the project is financially via
IRR 2 -17.44% By applying IRR, the project is financially no

Discount Rate NPV

-20.00% -187.50
-19.00% -109.09 Chart Title
-18.00% -37.55 600.00
-17.00% 27.61
500.00
-17.44% 0.00
400.00
-16.00% 86.87
-15.00% 140.65 300.00
-14.00% 189.34 200.00
-13.00% 233.32
100.00
-12.00% 272.92
0.00
-11.00% 308.44 -30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% 4
-10.00% 340.19 -100.00
-9.00% 368.43 -200.00
-8.00% 393.40 -300.00
-7.00% 415.34
-6.00% 434.45
-5.00% 450.94
-4.00% 464.99
-3.00% 476.77
-2.00% 486.43
-1.00% 494.13
0.00% 500.00
1.00% 504.17
2.00% 506.76
3.00% 507.88
4.00% 507.62
5.00% 506.10
6.00% 503.40
7.00% 499.59
8.00% 494.77
9.00% 489.00
10.00% 482.34
11.00% 474.88
12.00% 466.65
13.00% 457.73
14.00% 448.16
15.00% 437.99
16.00% 427.26
17.00% 416.02
18.00% 404.32
19.00% 392.17
20.00% 379.63
21.00% 366.72
22.00% 353.47
23.00% 339.92
24.00% 326.09
25.00% 312.00
26.00% 297.68
27.00% 283.15
28.00% 268.43
29.00% 253.55
30.00% 238.51
31.00% 223.33
32.00% 208.04
33.00% 192.65
34.00% 177.17
35.00% 161.61
36.00% 145.99
37.00% 130.32
38.00% 114.60
39.00% 98.86
40.00% 83.09
41.00% 67.31
42.00% 51.53
43.00% 35.75
44.00% 19.98
45.00% 4.22
45.27% 0.00
46.00% -11.51
47.00% -27.21
48.00% -42.87
49.00% -58.49
50.00% -74.07
 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
7.73% -3.45% 6.15% 10.46% 9.93% 13.71% -28.02% -1.46%
74,001 71,448 75,841 83,773 92,094 104,721 75,382 74,278
63,830 62,655 65,759 73,038 78,868 89,514 65,224 62,791
10,170 8,793 10,082 10,735 13,226 15,207 10,158 11,487
14% 12% 13% 13% 14% 15% 13% 15%
773 800 1,399 2,077 4,366 2,676 885 1,152
2,954 3,157 3,368 3,648 3,987 5,021 6,021 6,102
2,170 2,124 2,442 2,813 3,280 3,991 3,367 3,378
5,820 4,313 5,672 6,350 10,326 8,871 1,655 3,158
26% 40% 37% 36% 23% 32% 119% 52%
4,667 3,137 3,148 3,698 7,510 5,315 127 1,812
37.89 25.26 25.35 29.77 60.41 42.76 1.02 14.58
13.51% -33.33% 0.36% 17.44% 102.92% -29.22% -97.61% 1329.41%
18% 23% 21% 22% 11% 17% 205% 54%
6.8202 5.8098 5.3235 6.5494 6.6451 7.2692 2.091 7.8732
7.54% -14.81% -8.37% 23.03% 1.46% 9.39% -71.23% 276.53%
107.54% 85.19% 91.63% 123.03% 101.46% 109.39% 28.77% 376.53%

Required Growth rate to justify the price

D1 as per 5 years Historical Growth Rat

D1 as per 10 years Historical Growth Ra
D1 as per 5 years ROE*RE

Current Market Price (7/2/2022)

52-week High
52-week Low

Conclusion: Given the sales growth rate and EPS growth rat

P = D1/(k-g) k = (D1/P)+g
Cost of Equity

It is very unlikely that the cost of equity is such a low value o

 Dividend Discount Model value
ent Dividend Discount Model value
ividend Discount Model value

Existing Business +PVGO = Fair Value

133.33

88.89

95.24

97.56

100.00

and 25 million in Year 3, 4 and 5.

NPV is less than zero, the investment in the project is not financially viable; reject the project
NPV is greater than zero, the investment in the project is financially viable; Accept the project

>= Discount Rate or Cost of Capital, accept the project; Accept

he project is financially viable

e project is financially viable
e project is financially not viable

Chart Title

% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

 62%

147.90% Product of 1+Dividend Growth Rate

8.14% CAGR of Historical Dividend Growth rate (5 years)
CAGR = [(1+g1)*(1+g2)….(1+gn)^(1/n)]-1

142.69% Product of 1+Dividend Growth Rate

3.62% CAGR of Historical Dividend Growth rate (10 years)

9% 5-year ROE (from Screener.in)

3.44% ROE * Retained Earnings Ratio
829 Current Market Price (7th Feb 2022)
tify the price P = D1/(k-g) k-g = D1/P -g = (D1/P) -kg = (-D1/P)+k
Required Growth
8.51 13.97%
8.16 14.02%
8.14 14.02%
Price Dividend Expected
829.00 13.97% 14.02% 14.02%
979.00 14.13% 14.17% 14.17%
725.00 13.83% 13.87% 13.88%

growth rate and EPS growth rate, it is unlikely that the company to show a long-term sustainable growth rate of 14% to justify the price

ost of Equity 4.42% Cost of Equity = Risk Free Rate +[ Equity Beta (Avg Market Return-Average

st of equity is such a low value of a company like M&M

 rate of 14% to justify the price

Beta (Avg Market Return-Average Risk free Return)]

Restrauant Initial Investment 50000
IRR project 120%
NPV 60000

Steel Project Initial Investment 2000 cr

IRR project 30%
NPV 600 cr

Project A Project B
0 -400 -200
1 250 140
2 300 179
IRR 23% 36%
NPV @ 9% 81.86 79.10
2.76

The incremental investment gives required rate of return of 9% plus 2.79 in addition
The incremental project may not be as profitable as project B but it is profitable enough to ac

Payback Period
Time CF PV CF @ 15% cum CF
0 -40 -40.00 -40
1 15 13.04 -25
2 20 15.12 -5
3 25 16.44 20
4 25 14.29
5 25 12.43

Net Present Value (NPV) 31.33 Decision: Accept since NPV is positive
IRR 41.58% Decision: Accept since IRR>15%
Payback period (how long it takes to get back investmen 2.20 Years
Discounted Payback Period 2.72 Years
Payback period gives a sense risk associated with the project; Longer the payback period, higher the risk
Payback period can be used for grouping the projects on the basis of risk

Profitability Index PVCIF/PVCOF or NPV/PVCOF

Capital Available 1000 million
Capital Required for all 7
2000 million
positive NPV projects
Project # PVCOF PVCIF NPV
1 250 316 66
6 350 413 63
 3 300 343 43
4 100 114 14
7 400 448 48
5 100 107 7
8 500 530 30
2 100 96 -4
Total 2100 2367 267

Based on NPV 1, 6, and 7 177

Based on IRR 6, 1, 3, and 4 186
Based on PI 1, 6, 3, and 4 186

Profitability index measures productivity of capital

Exercise Discount Rate : 15%

Time Cash Flow IRR
0 -500 -500 NPV
1 100 86.96 Payback Period
2 100 75.61 Discounted Payback period
3 150 98.63 Profitability Index
4 150 85.76
5 200 99.44
6 200 86.47
7 300
8 300
9 300
10 300
IRR 29.25%
NPV 403.15
Discounted payback peirod 5.62

Problem 1
Time Cash Flow
0 -11 Old Equipment Curren BV
1 2.39 Sale Value
2 2.39 Loss of sale of old machine
3 2.39 Tax Saved
4 2.39
5 2.69 Depreciation for new machine
6 8.69 Depreciation for old machine
7 Incremental Depreciation
IRR 17.49% Decision: Replace the Tax saved on incremental Dep
NPV 3.15 old equipment
Adjustment
Tax gain on capital loss when old equipment was sold 1.32
Tax gain on incremental depreciation 0.09
Cash inflow of selling the new equipment at the end 7 y 4.50

Evaluating projects with different Lives

Machine A Machine B
0 -80 -180
1 20 30
2 20 30
3 40 50
4 40 50
5 50 60
6 60
7 60
8 60

NPV @ Discount Rate of 15% 26.54 28.18

Avoid decision based on NPV but computed Equated annual NPV

Using PMT find annual equal NP ₹7.92 ₹6.28

Select this machine Reject this machine

1 ₹7.92 6.89 ₹6.28

2 ₹7.92 5.99 ₹6.28
3 ₹7.92 5.21 ₹6.28
4 ₹7.92 4.53 ₹6.28
5 ₹7.92 3.94 ₹6.28
6 26.54 ₹6.28
7 ₹6.28
8 ₹6.28

Problem 2
Time Profit after tax Add: Depreciation
0 -1200
1 210.00 180.00 390.00
2 231.00 144.00 375.00
3 254.10 115.20 369.30
4 279.51 92.16 371.67
5 307.46 73.73 381.19
6 307.46 58.98 366.44
 7 307.46 47.19 354.65
8 307.46 37.75 345.21
9 307.46 30.20 337.66
10 307.46 24.16 331.62
11 307.46 19.33 326.79
12 307.46 15.46 322.92
13 307.46 12.37 319.83
14 307.46 9.90 317.36
15 307.46 39.58 437.04
IRR 30.35%
Decision: Accept since IRR > 15%
 5000
5100

Project A Project B
-400 -200
229.36 128.44
252.50 150.66
PV CIF 481.86 279.10
PV COF 400.00 200.00
NPV 81.86 79.10

us 2.79 in addition
t is profitable enough to accept

Cum PVCF
-40.00
-26.96
-11.83
4.60

nce NPV is positive

nce IRR>15%

IRR (%) PI
17.2 0.2640
18.00 0.1800
 16.6 0.1433
12.1 0.1400
13.5 0.1200
11.8 0.0700
11.2 0.0600
10.7 -0.0400

29.25%
403.15
4 years
5.62
0.8063

8.40
4.00
-4.40
0

1.5 1.5
1 0
0.5 1.5
0.15 0.45
 ₹5.46
₹4.75
₹4.13
₹3.59
₹3.12
₹2.71
₹2.36
₹2.05
₹28.18

1 2 3 4 5
Revenue 1000 1100 1210 1331 1464.1
Cost of Sales 700 770 847 931.7 1024.87
Cash Flow 300 330 363 399.3 439.23
After Tax CF 210 231 254.1 279.51 307.461
20%
BV (opening) Dep BV (closing)
 1 900.00 180.00 720.00
2 720.00 144.00 576.00
3 576.00 115.20 460.80
4 460.80 92.16 368.64
5 368.64 73.73 294.91
6 294.91 58.98 235.93
7 235.93 47.19 188.74
8 188.74 37.75 150.99
9 150.99 30.20 120.80
10 120.80 24.16 96.64
11 96.64 19.33 77.31
12 77.31 15.46 61.85
13 61.85 12.37 49.48
14 49.48 9.90 39.58
15 39.58 39.58 0.00
 Existing project

Original PriceCurrent Price

Cost of used land 6
Cost of Vacant Land 34 620 NPV @ 40 million land cost
40 NPV @ 6 million land cost

Proposed project land 6 120

Should we consider land cost for evaluation? No Yes

If Yes, should it ibe 6 or 120? Not Applicable 6

Sunk cost example

5 years you have initiated an R&D project
You have spent Rs. 30 million
R&D project is successful; developed a new product
Market testing shows there is enough demand
Should we consider R&D cost of Rs. 30 as project cost (cash outflow)

NPV including R&D cost Negative

NPV excluding R&D cost Positive

Working capital example

0 1 2 3 4 5
Cash Outflow -100 -100 -100 -100 -100 0
Cash inflow 100 100 100
Incremental CF -100 -100 -100 0 0 100
 500 sq ft @ 1000 -500000
NPV 600 6000
PV @ 40 million land costNegative NPV -494000
PV @ 6 million land cost Positive

Yes
120

6 7 8
0 0 0
100 100 0
100 100 0
Year 0 1 2 3 4 5
Capacity 300 300 300 300 300
Estimated Capacity Utilization 50% 65% 85% 85% 85%
Production Volume (units in lakhs) 150 195 255 255 255
Selling Price Per unit 1.20 1.26 1.32 1.39 1.46
Initial Project Cost -330
Sales Revenue (Rs in Lakhs) 180.00 245.70 337.365 354.233 371.945
Expenses (Excluding Dep and interest)
Raw Material 126.00 171.99 236.156 247.963 260.361
Utilities 5.00 6.00 8.00 8.40 8.82
Employee Cost 10.00 10.50 11.03 11.58 12.16
Factory Overhead 4.00 4.40 4.84 5.32 5.86
Admin Overhead 8.00 8.48 8.99 9.53 10.10
Selling Expenses 11.00 14.29 18.87 19.71 20.60
Other Cost or Miscellaneous Exp 15.00 15.75 16.54 17.36 18.23
Depreciation (always zero) 0.00 0.00 0.00 0.00 0.00
Interest (always zero) 0.00 0.00 0.00 0.00 0.00
Total Expenses 179.00 231.41 304.42 319.87 336.12

Profit Before Depreciation and Interest 1.00 14.30 32.95 34.37 35.82
Less Tax on PBIT 0.00 0.00 0.00 0.00 0.00
Add: Salvage value of assets
Add: Working capital released
Cash flows -330 1.00 14.30 32.95 34.37 35.82
PV of Cash Inflow @ 10.65% discount rate -330.00 0.90 11.68 24.32 22.93 21.60

Net Present Value -131.52

IRR 2.64%
Updated solution after computing cost of capital (disc

Depreciation Schedule (Plant and Machinery) 1 2 3 4 5

Opening Balance of Depreciatable Assets 200.00 160.00 128.00 102.40 81.92
Less Dep for the year @ 20% 40.00 32.00 25.60 20.48 16.38
Closing Balance of Plant and Machinery 160 128.00 102.40 81.92 65.54

Depreciation Schedule (Building) 1 2 3 4 5

Opening Balance of Depreciatable Assets 40 36.00 32.40 29.16 26.24
Less Dep for the year @ 10% 4.00 3.60 3.24 2.92 2.62
Closing Balance of Building 36 32.40 29.16 26.24 23.62
Tax Schedule 1 2 3 4 5
PBDIT 1.00 14.30 32.95 34.37 35.82
Less: Dep for Plant and Machinery 40.00 32.00 25.60 20.48 16.38
Less: Dep for Building 4.00 3.60 3.24 2.92 2.62
Less: Technnical Know how fee 20.00
Taxable Profit -63.00 -21.31 4.11 10.97 16.81
Tax on Taxable profit at 30% tax rate 0 0 0 0 0

Cumulative profit -63.00 -84.31 -80.20 -69.23 -52.41

Means of Finance (Rs. In Lakhs)

Share Capital Weight Cost WACC
Promoters Contribution 100 30.30% ### 3.38%
Public -
Rupee Loan @ 12% interest 200 60.61% 12% 7.27%
Interest Free Development Loan 30 9.09% 0% 0

Total 330 100.00% 10.65%

Beta 1.4
RF 7%
Risk premium 6.38%
Cost of equity 15.93%
 6 7 8 9 10
300 300 300 300 300
85% 85% 85% 85% 85%
255 255 255 255 255
1.53 1.61 1.69 1.77 1.86

390.542 410.069 430.573 452.101 474.706

273.38 287.048 301.401 316.471 332.295

9.26 9.72 10.21 10.72 11.26
12.76 13.40 14.07 14.77 15.51
6.44 7.09 7.79 8.57 9.43
10.71 11.35 12.03 12.75 13.52
21.53 22.50 23.53 24.61 25.74
19.14 20.10 21.11 22.16 23.27
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
353.22 371.21 390.14 410.06 431.02

37.32 38.86 40.43 42.04 43.69

0.00 0.00 7.74 10.08 11.03
55.42
50.00
37.32 38.86 32.69 31.96 138.08
20.33 19.13 14.55 12.85 50.19

computing cost of capital (discounting rate)

6 7 8 9 10
65.54 52.43 41.94 33.55 26.84
13.11 10.49 8.39 6.71 5.37
52.43 41.94 33.55 26.84 21.47

6 7 8 9 10
23.62 21.26 19.13 17.22 15.50
2.36 2.13 1.91 1.72 1.55
21.26 19.13 17.22 15.50 13.95
 6 7 8 9 10
37.32 38.86 40.43 42.04 43.69
13.11 10.49 8.39 6.71 5.37
2.36 2.13 1.91 1.72 1.55

21.85 26.24 30.13 33.61 36.77

0 0 7.74 10.08 11.03

-30.56 -4.32 25.81

 0 1 2 3
1967 1968 1969
Existing machine Second shifSecond shifSecond shif
Employee Cost 93430 93430 93430
Power and steam 41472 41472 41472
Total Cost 134902 134902 134902

New Machine
Employee Cost 34680 34680 34680
Power and steam 28188 28188 28188
Total Cost 62868 62868 62868

Cost Saving 72034 72034 72034

Cost saving net of taxes (Tax rate = 70%) 21610 21610 21610
Depreciation Tax Shield @ 70% 34650 8085 7277
Resale value of equipment
Cash Inflow -165000 56260 29695 28887
PV of Cash flows at 13% -165000 49788 23256 20020
Total PV of Cash inflows at 13% 200538
PV of Cash Outflow 165000
Net Present Value (NPV) 35538 Decision: Accept the new machine investment sin
Internal Rate of Return 18.49% Decision: Accept the new machine investment sin
Payback period 4.49 years 4.495825
Discounted payback period 6.88 years 6.881972

Depreciation Schedule WDV rate 30% 10% 10%

Opening Balance 165000 115500 103950
Dep for the year 49500 11550 10395
Closing Balance 115500 103950 93555

0 1 2 3
Cum Cash Flow -165000 -108740 -79045 -50158
Cum Discounted Cash Flow -165000 -115212 -91957 -71937
 4 5 6 7 8 9 10
1970 1971 1972 1973 1974 1975 1976
Second shifThird shift Third shift Third shift Third shift Third shift Third shift
93430 139820 139820 139820 139820 139820 139820
41472 41472 41472 41472 41472 41472 41472
134902 181292 181292 181292 181292 181292 181292

34680 34680 34680 69360 69360 69360 69360

28188 28188 28188 45101 45101 45101 45101
62868 62868 62868 114461 114461 114461 114461

72034 118424 118424 66831 66831 66831 66831

21610 35527 35527 20049 20049 20049 20049
6549 8841 7515 6388 5429 4615 3923
31756
28159 44368 43042 26437 25479 24664 55728
17270 24081 20674 11237 9584 8210 16417

ew machine investment since NPV is positive

ew machine investment since IRR is greater than the discount rate (cost of capital)

10% 15% 15% 15% 15% 15% 15%

93555 84200 71570 60834 51709 43953 37360
9356 12630 10735 9125 7756 6593 5604
84200 71570 60834 51709 43953 37360 31756

4 5 6 7 8 9 10
-21999 22369
-54666 -30585 -9911 1326

4.495825
6.881972
Additional Investments
Machine Cost 120000
Installation 45000
165000

Operator

Inspector
Utility Man
Technical Assis
Technician

Second shift
Third Shift

Power

Steam

Power&Steam
Capacity Production Estimates b
First Shift 132000 per month Year
Second Shift 96000 per monthAdditional Equipment 20000 1965
Third Shift 96000 per month 1966
1967
New Machine 1968
First shift 240000 per month 1969
Second shift 180000 1970
1971
Existing Machine New Machine
Pay scale # employeCost # employeCost
200 8 19200 7 16800

180 4 8640 3 6480

150 2 3600 2 3600
400 2 9600 1 4800
250 2 6000 1 3000
47040 34680

46390 34680
46390 NA

4.00 per hour 4.53 per hour

2.00 per hour 2.00 per hour

41472 (4+2)*24 hours*24 days of a month*12 months

roduction Estimates based on Sales Forecast
Vials per month
100000
130000
150000
180000
210000
230000
250000

330 5.5
270 4.5
10
 Exhibit 4: Traffic Details for the Naini-Manikpur-Itarsi Route
2010-11
Northern Central Western Central
Railway Railway
Passenger, Mail, and Express Trains per Day 22 48
Goods Trains per Day 8 31
Route Length in Route Kilometers (RKM) 83 522
Load in Tonnes for Passenger, Mail, and Express Trains 1,750 1,750
Load in Tonnes for Goods Trains 1,900 1,900

Exhibit 6: Energy and Lubricant Consumption Norms

Electricity
Northern Central Western Central
Railway Railway
Fuel and Energy Consumption
Passenger, Mail, and Express KWH/Liters per 1000 GT 19.60 20.20
Goods KWH/Liters per 1000 GTKM 8.82 8.28
Lubricant Consumption
Passenger, Mail, and Express Liters per 1000 GTKM 0.0144
Goods Liters per 1000 GTKM 0.00517

Exhibit 7 Energy, Lubricant and Repair and Maintenance Cost Norms

Electricity
Northern Central Western Central
Railway Railway
Rate of Electricity in Rs. per KWH 4.52
Rate of HSD oil (diesel) in Rs. per Liter
Price of Lubricants in Rs. per Liter 65.31
Repair and Maintenance
Repair and Maintenance of Locomotives in Rs. per
6.80 10.95
1000 GTKM
Average Repair and Maintenance of Fixed
Installations in Rs./RKM per Annum 138371

Estimation of Annual Gross Tonne Kilometer (GTKM) Annual GTKM = No. of Trains * Route KM * Load * 365 days
Year Passenger (North) Passenger (Western)
1 1,883,137,200 27140998500
2 1,883,137,200 27,140,998,500
3 1,883,137,200 27,140,998,500
4 1,883,137,200 27,140,998,500
5 1,883,137,200 27,140,998,500
 6 2,109,113,664 30,397,918,320
7 2,109,113,664 30,397,918,320
8 2,109,113,664 30,397,918,320
9 2,109,113,664 30,397,918,320
10 2,109,113,664 30,397,918,320
From year 11 onwards 2,362,207,304 34,045,668,518

9057890 134,619,353
Fuel and Energy Cost Estimation 36909489 548,248,170
Year Disel Electricity
1 7,452,403,000 3,708,156,213
2 7,452,403,000 3,708,156,213
3 7,452,403,000 3,708,156,213
4 7,452,403,000 3,708,156,213
5 7,452,403,000 3,708,156,213
6 8,561,046,961 4,238,194,446
7 8,561,046,961 4,238,194,446
8 8,561,046,961 4,238,194,446
9 8,561,046,961 4,238,194,446
10 8,561,046,961 4,238,194,446
From year 11 onwards 9,845,599,317 4,848,849,165

Lubricant Cost Estimation

Year Disel Electricity
1 217,436,658 36,851,850
2 217,436,658 36,851,850
3 217,436,658 36,851,850
4 217,436,658 36,851,850
5 217,436,658 36,851,850
6 250,596,944 42,038,527
7 250,596,944 42,038,527
8 250,596,944 42,038,527
9 250,596,944 42,038,527
10 250,596,944 42,038,527
From year 11 onwards 289,150,043 48,000,497

Repairs and Maintenance Cost Estimation 1,163,178,691.09 696,656,467.16

Year Disel Electricity
1 1,163,178,691 696,656,467
2 1,163,178,691 696,656,467
3 1,163,178,691 696,656,467
4 1,163,178,691 696,656,467
5 1,163,178,691 696,656,467
6 1,348,661,559 794,444,928
7 1,348,661,559 794,444,928
 8 1,348,661,559 794,444,928
9 1,348,661,559 794,444,928
10 1,348,661,559 794,444,928
From year 11 onwards 1,565,582,655 908,815,089

Exhibit 5: CAPITAL EXPENDITURE ESTIMATES

Rs. In Millions
Electrical Engineering Cost 4,600.00
Signaling Cost (excluding Rs. 50 million for upgrading
to LED) 612.80
Telecom Cost 452.60
Civil Engineering Cost 340.00
Total Capital Expenditure 6005.4

Cash Flow Estimation

Year Cash Flow PV of Cash Flow
0 -300.27 -300.27
1 -600.54 -536.20
2 -1501.35 -1196.87
3 -2101.89 -1496.08
4 -1499.85 -953.18
5 4,391.35 2491.77
6 4,391.35 2224.80
7 4,391.35 1986.43
8 4,391.35 1773.59
9 4,391.35 1583.57
10 5,085.63 1637.44
11 5,085.63 1462.00
12 5,085.63 1305.35
13 5,085.63 1165.49
14 5,085.63 1040.62
15 5,894.67 1076.93
16 5,894.67 961.55
17 5,894.67 858.52
18 5,894.67 766.54
19 5,894.67 684.41
20 5,894.67 611.08
21 5,894.67 545.61
22 5,894.67 487.15
23 5,894.67 434.96
 24 5,894.67 388.35
25 5,894.67 346.74
26 5,894.67 309.59
27 5,894.67 276.42
28 5,894.67 246.81
29 5,894.67 220.36
30 5,894.67 196.75
31 5,894.67 175.67
32 5,894.67 156.85
33 5,894.67 140.04
34 5,894.67 125.04
Internal Rate of Return 42.87% 21197.84
Required Rate of Return 12.00% NPV of the project

Decision: Accept the project since IRR of the project is > Required rate of return.
tarsi Route
2017-18 (Estimate)
Northern Central Western Central Growth Rate
Year
Railway Railway (passenger)
24 55 First 5-years 0%
17 43 Year 6 (upto year 10) 12%
83 522 Year 11 (beyond) 12%
2,590 2,590 Project Life 30 years after completion
3,250 3,250 Project Construction Time 5 years

Norms
Diesel
Northern Central Western Central
Railway Railway

4.81 4.96 Year 1 to 5

3.01 2.84 Year 6 to 10
From Year 11
0.0681
0.0478 Electricity Requirem

nce Cost Norms Year 1 to 5

Diesel Year 6 to 10
Northern Central Western Central
Railway Railway From Year 11

33.22 Disel Requiremen

65.31
Year 1 to 5

25.75 19.93
Year 6 to 10

From Year 11

te KM * Load * 365 days Cost of Elect

Goods (North) Goods (Western) Total Year 1 to 5
1,673,798,750 26626567500 57,324,501,950 Year 6 to 10
1,673,798,750 26,626,567,500 57,324,501,950 From Year 11
1,673,798,750 26,626,567,500 57,324,501,950
1,673,798,750 26,626,567,500 57,324,501,950 Cost of Di
1,673,798,750 26,626,567,500 57,324,501,950 Year 1 to 5
2,008,558,500 31,951,881,000 66,467,471,484 Year 6 to 10
2,008,558,500 31,951,881,000 66,467,471,484 From Year 11
2,008,558,500 31,951,881,000 66,467,471,484
2,008,558,500 31,951,881,000 66,467,471,484
2,008,558,500 31,951,881,000 66,467,471,484 Repairs and Maintenance (E
2,410,270,200 38,342,257,200 77,160,403,222 24187164.46
28000170.7152
5038134.2375 75,619,451.70 224334828 7,452,403,000 32452847.02502
14,762,905 220,467,979 820388543 3,708,156,213
Saving
3,744,246,787 Repairs and Maintenance (
3,744,246,787 91591100.7125
3,744,246,787 106030058.223
3,744,246,787 122891295.7198
3,744,246,787
4,322,852,515
4,322,852,515
4,322,852,515
4,322,852,515
4,322,852,515
4,996,750,152

Saving
180,584,808
180,584,808
180,584,808
180,584,808
180,584,808
208,558,417
208,558,417
208,558,417
208,558,417
208,558,417
241,149,545

Saving
466,522,224 83714455
466,522,224
466,522,224
466,522,224
466,522,224
554,216,630
554,216,630
 554,216,630
554,216,630
554,216,630
656,767,567

Table 3: PHASING OF CAPITAL EXPENDITURE

Time Period for Capita
2012-13 to 2016-17 (5 years)
Proportion of Expenditure

Year 0 5% 300.27
Year 1 10% 600.54
Year 2 25% 1501.35
Year 3 35% 2101.89
Year 4 25% 1499.85 Spare scrap value of 1.5 adjusted
Life of Project Once 30 years
Completed 6003.90
 Growth Rate
(goods)
0%
20%
20%
years after completion
5 years

NCR-PassengeWCR-Passenger NCR Good WCR Goods Lubricant Requirement-Electrical

1883137200 27140998500 1673798750 2.6627E+10 Year 1 to 5 417947.55408 146312.8935125
2109113664 30397918320 2008558500 3.1952E+10 Year 6 to 10 468101.2605696 175575.472215
2362207304 34045668518.4 2410270200 3.8342E+10 From Year 11 524273.411838 210690.566658

Electricity Requirement in KWH Cost of Lubricant

NCR-PassengeWCR-Passenger NCR Good WCR Goods Lubricant Requirement-Electrical
36909489 548248170 14762905 220467979 Year 1 to 5 27296154.75696 9555695.0753014
41338628 614037950 17715486 264561575 Year 6 to 10 30571693.3278 11466834.090362

46299263 687722504 21258583.2 317473890 From Year 11 34240296.52714 13760200.908434

Disel Requirement in KWH

NCR-PassengeWCR-Passenger NCR Good WCR Goods
9057889.932 134619353 5038134.24 75619451.7

10144836.72 6045761.09 90743342

150773675

11362217.13 7254913.3 108892010

168866516

Cost of Electricity
166830891 2478081727 66728330.5 996515265 3708156213
186850598 2775451534.29 80073996.6 1195818318 4238194446
209272669 3108505718.4 96088795.9 1434981981 4848849165

Cost of Disel
300903104 4472054892 167366819 2512078185 7452403000
 337011476 5008701479 200840183 3014493823 8561046961
377452853 5609745657 241008220 3617392587 9845599317

Repairs and Maintenance (Electrical

588754847.7 83714455 696656467
682730303 83714455 794444928
792647787 83714455 908815089

Repairs and Maintenance (Diesel)

1071587590 1163178691
1242631500 1348661559
1442691360 1565582655
 Lubricant Requirement-Disel
1976543.64 1352757.51
2213728.88 1623309.01
2479376.34 1947970.81

ost of Lubricant
Lubricant Requirement-Disel
129088065 88348592.8 36851849.8 217436658 180584808
144578633 106018311 42038527.4 250596944 208558417

161928069 127221974 48000497.4 289150043 241149545

20 year loan Interest rat 12% Nominal Interest Rate Real Interest Rate
Real Return+Expected Inflation+Credit Risk+profit margin
Example
Real Rate 2% (1+Real Rate) * (1+Inflation) = (1+
Risk Free Rate
Expected Inflation 4% Real Rate = (1+Nominal)/(1+inflati
Credit Risk 2%
Profit margin 4%

Real Cash Flows are to be discounted at Real Discount Rate and that will be equal to Nominal Cash Flows discounted at Nomin
Nominal CF PV @ 12%(nominal) Real CF PV @ 7.69%(Real)
0 -100.00 -100.00 -100.00 -100.00
1 31.20 27.86 30.00 27.86
2 32.45 25.87 30.00 25.87
3 33.75 24.02 30.00 24.02
4 35.10 22.30 30.00 22.30
5 36.50 20.71 30.00 20.71
NPV 20.7590 20.7590

What is the NPV of the above project if real cash flows are discounted at nominal rate
0 -100.00 -100.00
1 30.00 26.79
2 30.00 23.92
3 30.00 21.35
4 30.00 19.07
5 30.00 17.02
8.14

Cost of Capital Computation

60% in Stock 1 and 40% in
stock 2
Expected Return
Year Stock 1 Stock 2 Stock 1 Stock 2 Total Return
1 12% 18% 7.200% 7.200% 14.400%
2 18% 14% 10.800% 5.600% 16.400%
3 15% 17% 9.000% 6.800% 15.800%
4 20% 12% 12.000% 4.800% 16.800%
5 25% 8% 15.000% 3.200% 18.200%
Average Return 18.00% 13.80% "Type equation here." 16.320%
Risk (Std Dev of returns) 4.95% 4.02% Stdev () 1.390%
Covariance -0.1580% Stdev.P() 1.2432%
Std Dev of returns of a portfolio is not always equal weighted average std dev of individual securities in the portfolio

Harry Markowitz -0.991348949021039

Portfolio Risk = s(p)2 å å Cov i j Wi Wj
40%
Security 1
Steps 60% Security 1 0.0470400%
1. Compute the return of two or more securities 40% Security 2 -0.0252800%
2. Find the average of the returns Variance of the portfolio
3. Find the covariance of the returns of pairs of securites Std Dev of Portfolio Return
4. Create a N x N Table and note down portfolio weights
5. Apply the portfolio Equation

M&M Asian Paints HDFC Bank M&M Return

24-Jan-22 854.70 3,155.15 1,486.65
25-Jan-22 854.50 3,147.10 1,488.05 -0.02%
27-Jan-22 858.05 3,116.95 1,474.95 0.42%
28-Jan-22 869.65 3,110.85 1,463.25 1.35%
31-Jan-22 885.80 3,152.25 1,485.70 1.86%
1-Feb-22 869.70 3,196.25 1,497.00 -1.82%
2-Feb-22 869.35 3,197.70 1,531.20 -0.04%
3-Feb-22 856.20 3,203.00 1,515.35 -1.51%
4-Feb-22 841.70 3,236.65 1,524.00 -1.69%
7-Feb-22 829.50 3,174.70 1,468.15 -1.45%
8-Feb-22 832.05 3,216.35 1,461.85 0.31%
9-Feb-22 840.20 3,228.35 1,497.60 0.98%
10-Feb-22 853.05 3,238.75 1,525.10 1.53%
11-Feb-22 853.65 3,216.30 1,518.85 0.07%
14-Feb-22 825.05 3,143.45 1,473.70 -3.35%
15-Feb-22 854.60 3,264.60 1,517.80 3.58%
16-Feb-22 864.25 3,252.85 1,515.75 1.13%
17-Feb-22 862.25 3,265.85 1,506.50 -0.23%
18-Feb-22 852.00 3,258.45 1,512.35 -1.19%
21-Feb-22 841.10 3,251.65 1,522.10 -1.28%
22-Feb-22 853.25 3,227.15 1,510.70 1.44%
Avg Ret 0.0040%
Std Dev.P 1.58%
Variance 0.02496%

Covariance Matrix
M&M
M&M 0.02496%
 AP 0.01078%
HDFC Bank 0.01459%
RIL
Avg Return 1.00%
Weights 20%
Weights M&M
20% M&M 0.00100%
42% AP 0.00091%
38% HDFC Bank 0.00111%
RIL
s(p)2 = å å Cov i j Wi Wj Portfolio Variance
Portfolio SD (port risk)
Portfolio Return
Annualized Port Risk

Max Expected Return

Max Loss

Continuing 2 stock example

Sec 1 Return 18.00% Portfolio Weight Sec 1 Weight Sec 2Port Return
Sec 2 Return 13.80% 1 100% 0 18.00%
Cov of 1, 1 0.196% 2 99% 1.00% 17.96%
Cov of 1, 2 -0.1580% 3 98% 2.00% 17.92%
Cov of 2, 2 0.130% 4 97% 3.00% 17.87%
Cov of 2, 1 -0.1580% 5 96% 4.00% 17.83%
6 95% 5.00% 17.79%
7 94% 6.00% 17.75%
8 93% 7.00% 17.71%
9 92% 8.00% 17.66%
10 91% 9.00% 17.62%
11 90% 10.00% 17.58%
12 89% 11.00% 17.54%
13 88% 12.00% 17.50%
14 87% 13.00% 17.45%
15 86% 14.00% 17.41%
16 85% 15.00% 17.37%
17 84% 16.00% 17.33%
18 83% 17.00% 17.29%
19 82% 18.00% 17.24%
20 81% 19.00% 17.20%
21 80% 20.00% 17.16%
22 79% 21.00% 17.12%
23 78% 22.00% 17.08%
24 77% 23.00% 17.03%
25 76% 24.00% 16.99%
26 75% 25.00% 16.95%
27 74% 26.00% 16.91%
28 73% 27.00% 16.87%
29 72% 28.00% 16.82%
30 71% 29.00% 16.78%
31 70% 30.00% 16.74%
32 69% 31.00% 16.70%
33 68% 32.00% 16.66%
34 67% 33.00% 16.61%
35 66% 34.00% 16.57%
36 65% 35.00% 16.53%
37 64% 36.00% 16.49%
38 63% 37.00% 16.45%
39 62% 38.00% 16.40%
40 61% 39.00% 16.36%
41 60% 40.00% 16.32%
42 59% 41.00% 16.28%
43 58% 42.00% 16.24%
44 57% 43.00% 16.19%
45 56% 44.00% 16.15%
46 55% 45.00% 16.11%
47 54% 46.00% 16.07%
48 53% 47.00% 16.03%
49 52% 48.00% 15.98%
50 51% 49.00% 15.94%
51 50% 50.00% 15.90%
52 49% 51.00% 15.86%
53 48% 52.00% 15.82%
54 47% 53.00% 15.77%
55 46% 54.00% 15.73%
56 45% 55.00% 15.69%
57 44% 56.00% 15.65%
58 43% 57.00% 15.61%
59 42% 58.00% 15.56%
60 41% 59.00% 15.52%
61 40% 60.00% 15.48%
62 39% 61.00% 15.44%
63 38% 62.00% 15.40%
64 37% 63.00% 15.35%
65 36% 64.00% 15.31%
66 35% 65.00% 15.27%
67 34% 66.00% 15.23%
68 33% 67.00% 15.19%
 69 32% 68.00% 15.14%
70 31% 69.00% 15.10%
71 30% 70.00% 15.06%
72 29% 71.00% 15.02%
73 28% 72.00% 14.98%
74 27% 73.00% 14.93%
75 26% 74.00% 14.89%
76 25% 75.00% 14.85%
77 24% 76.00% 14.81%
78 23% 77.00% 14.77%
79 22% 78.00% 14.72%
80 21% 79.00% 14.68%
81 20% 80.00% 14.64%
82 19% 81.00% 14.60%
83 18% 82.00% 14.56%
84 17% 83.00% 14.51%
85 16% 84.00% 14.47%
86 15% 85.00% 14.43%
87 14% 86.00% 14.39%
88 13% 87.00% 14.35%
89 12% 88.00% 14.30%
90 11% 89.00% 14.26%
91 10% 90.00% 14.22%
92 9% 91.00% 14.18%
93 8% 92.00% 14.14%
94 7% 93.00% 14.09%
95 6% 94.00% 14.05%
96 5% 95.00% 14.01%
97 4% 96.00% 13.97%
98 3% 97.00% 13.93%
99 2% 98.00% 13.88%
100 1% 99.00% 13.84%
101 0% 100.00% 13.80%

Weight Sec 1 Weight Sec 2Port Return

Choice 1 1% 99% 0.13842
Choice 2 89% 11% 0.17538

Which portfolio will you prefer?

 7.69231%

Today you have Rs. 100

Real Rate) * (1+Inflation) = (1+Nominal) 1 kg of sugar 40
al Rate = (1+Nominal)/(1+inflation)-1 Today you can buy 2.5 kg of sugar

Instead of buying sugar today, you have invested Rs. 100 @ 12% for one year

ash Flows discounted at Nominal Discount Rate At the end of 1 year 112
@ 7.69%(Real) 1 kg of sugar 41.6
Sugar quty that you can buy 2.69 kg at the end of 1 year

% increase in sugar Quty 7.69231%

xi-X(Bar) yi-Y(Bar) xi-X(Bar) x yi-Y(Bar) xi-X(Bar)^2 yi-Y(Bar)^2

0.00036864 -6.00% 4.20% -0.2520% 0.360% 0.176%
6.4E-07 0.00% 0.20% 0.0000% 0.000% 0.000%
2.704E-05 -3.00% 3.20% -0.0960% 0.090% 0.102%
2.304E-05 2.00% -1.80% -0.0360% 0.040% 0.032%
0.00035344 7.00% -5.80% -0.4060% 0.490% 0.336%
0.08% Sum -0.7900% 0.980% 0.648%
0.0155% Sum/N -0.1580% 0.196% 0.130%
1.2432% Covar of Sec.1 & 2 Var of Sec 1 Var of Sec 2
rities in the portfolio
 60%
Security 2
###
0.0311040% 21.200% 15.480%
### 0.0046864 0.555%
Err:502 6.8457% 7.452%
Portfolio Risk

AP Returns HDFC Bank Ret

-0.26% 0.09%
-0.96% -0.88%
-0.20% -0.79%
1.33% 1.53%
1.40% 0.76%
0.05% 2.28%
0.17% -1.04%
1.05% 0.57%
-1.91% -3.66%
1.31% -0.43%
0.37% 2.45%
0.32% 1.84%
-0.69% -0.41%
-2.27% -2.97%
3.85% 2.99%
-0.36% -0.14%
0.40% -0.61%
-0.23% 0.39%
-0.21% 0.64%
-0.75% -0.75%
0.1210% 0.0936%
1.28% 1.63%
0.0163% 0.0266%

AP HDFC Bank RIL

0.01078% 0.01459% VARIANCE
 0.0163% 0.0155%
0.0155% 0.0266%

30.24% 23.41%
42% 38%
AP HDFC Bank RIL
0.00091% 0.00111%
0.00288% 0.00248%
0.00248% 0.00384%

tfolio Variance 0.01670%

tfolio SD (port risk) 1.2923%
tfolio Return 21.7956%
nualized Port Risk 20.43% Daily SD * SQRT(250)

x Expected Return 83.10%

-39.51%

Port Risk (SD)Port Return Port Return

4.42719% 0.1800
4.34723% 0.1796 Chart Title
4.26728% 0.1792 0.1900
4.18733% 0.1787 0.1800
4.10739% 0.1783
0.1700
4.02746% 0.1779
0.1600
3.94753% 0.1775
3.86761% 0.1771 0.1500

3.78769% 0.1766 0.1400

3.70779% 0.1762 0.1300
3.62789% 0.1758 0.1200
3.54800% 0.1754
0.1100
3.46813% 0.1750
3.38826% 0.1745 0.1000
0.00000% 1.00000% 2.00000% 3.00000% 4.00000% 5.00000%
3.30840% 0.1741
3.22856% 0.1737 Portfolio Risk
3.14873% 0.1733
3.06891% 0.1729
2.98911% 0.1724 If correlation between two assets are perfectly negative, then there is a portfolio c
2.90933% 0.1720 If correlation between two assets are perfectly positive (+1), then risk and return a
2.82956% 0.1716 If correlation between two assets are between -1 and +1, then risk is initially comin
2.74981% 0.1712
2.67008% 0.1708
2.59038% 0.1703 Covariance = SD (A) * SD (B) * Correlation (A B)
2.51070% 0.1699
2.43105% 0.1695
2.35143% 0.1691
2.27184% 0.1687
2.19229% 0.1682
2.11278% 0.1678
2.03332% 0.1674
1.95391% 0.1670
1.87456% 0.1666
1.79528% 0.1661
1.71607% 0.1657
1.63695% 0.1653
1.55793% 0.1649
1.47902% 0.1645
1.40025% 0.1640
1.32164% 0.1636
1.24322% 0.1632
1.16503% 0.1628
1.08712% 0.1624
1.00955% 0.1619
0.93240% 0.1615
0.85580% 0.1611
0.77991% 0.1607
0.70494% 0.1603
0.63124% 0.1598
0.55930% 0.1594
0.48990% 0.1590
0.42428% 0.1586
0.36451% 0.1582
0.31392% 0.1577
0.27759% 0.1573
0.26153% 0.1569
0.26940% 0.1565
0.29931% 0.1561
0.34558% 0.1556
0.40261% 0.1552
0.46648% 0.1548
0.53473% 0.1544
0.60589% 0.1540
0.67905% 0.1535
0.75362% 0.1531
0.82922% 0.1527
0.90559% 0.1523
0.98256% 0.1519
 1.05999% 0.1514
1.13779% 0.1510
1.21589% 0.1506
1.29424% 0.1502
1.37279% 0.1498
1.45150% 0.1493
1.53036% 0.1489
1.60935% 0.1485
1.68844% 0.1481
1.76762% 0.1477
1.84687% 0.1472
1.92620% 0.1468
2.00559% 0.1464
2.08504% 0.1460
2.16453% 0.1456
2.24406% 0.1451
2.32364% 0.1447
2.40325% 0.1443
2.48289% 0.1439
2.56256% 0.1435
2.64225% 0.1430
2.72197% 0.1426
2.80171% 0.1422
2.88147% 0.1418
2.96125% 0.1414
3.04105% 0.1409
3.12086% 0.1405
3.20069% 0.1401
3.28053% 0.1397
3.36038% 0.1393
3.44024% 0.1388
3.52012% 0.1384
3.60000% 0.1380

Port Risk (SD)Port Return

3.52% 13.84%
3.55% 17.54%
d Rs. 100 @ 12% for one year

g at the end of 1 year

000% 5.00000%

egative, then there is a portfolio combination that give zero risk

ositive (+1), then risk and return are linear (straight line)
1 and +1, then risk is initially coming down and then risk is increasing (like the one shown above)
 Stock A Stock B GOVT SEC Portfolio Weights
Return 12% 20% 7% Stock A Stock B
Standard Deviation of Returns 7% 12% 0% 100% 0%
Variance 0.49% 1.44% 0% 95% 5%
Correlation between A and B 0.1 90% 10%
Covariance between A and B 0.00084 85% 15%
80% 20%
Portfolio Return 75% 25%
70% 30%
25.00%
65% 35%
60% 40%
20.00%
55% 45%
50% 50%
45% 55%
15.00% 40% 60%
35% 65%
30% 70%
10.00% 25% 75%
20% 80%
15% 85%
5.00%
Correlation = Sigma (Xi-X)*(Gi-G)/N / SD(x) * SD (G) 10% 90%
5% 95%
0.00% 0% 100%
0.2000% 0.4000% 0.6000% 0.8000% 1.0000% 1.2000% 1.4000% 1.6000%

When the correlation is equal to 1, the portfolio risk is equal to weighted average risk of the stocks
in the portfolio. That is the reason I said “Portfolio risk is not always equal to weighted average
risk of the individual stocks in the portfolio”.

Div Port Risk free Gvt

Return 15% 6%
SD of Return (Risk) 8% 0%

Investment (portfolio) 40% 60%

Port Return 9.600%
Port Risk 3.200%

Expected Return of a security = RF + Beta (RM-RF)

Where Beta is Risk measure of individual security
Beta = SLOPE(Stock Return, Market Return)
Beta = Covar(Stock, Market)/Var (Market)
RF = current risk free govt securities return
RM-RF = Average historical differnece between Market Return and Risk Free Return
Market Return = NSE-50 index return (usually in India) or S&P 500 in the US

Assuming RM-RF is equal to 5%, current RF is 6.2%

What is cost of corporate bond whose beta is equal to 0.2 7.20%

What is cost of equity of DLF stock whose Beta is 1.97 16.05%
What is cost of equity of Reliance stock whose Beta is 1.03 11.35%
Portfolio Risk Portfolio Return
Weighted Avg SD of stocks
0.4900% 12.00% 7.00% 7.0000%
0.4538% 12.40% 6.74% 7.2500%
0.4264% 12.80% 6.53% 7.5000%
0.4078% 13.20% 6.39% 7.7500%
0.3981% 13.60% 6.31% 8.0000%
0.3971% 14.00% 6.30% 8.2500%
0.4050% 14.40% 6.36% 8.5000%
0.4216% 14.80% 6.49% 8.7500%
0.4471% 15.20% 6.69% 9.0000%
0.4814% 15.60% 6.94% 9.2500%
0.5245% 16.00% 7.24% 9.5000%
0.5764% 16.40% 7.59% 9.7500%
0.6371% 16.80% 7.98% 10.0000%
0.7066% 17.20% 8.41% 10.2500%
0.7850% 17.60% 8.86% 10.5000%
0.8721% 18.00% 9.34% 10.7500%
0.9681% 18.40% 9.84% 11.0000%
1.0728% 18.80% 10.36% 11.2500%
1.1864% 19.20% 10.89% 11.5000%
1.3088% 19.60% 11.44% 11.7500%
1.4400% 20.00% 12.00% 12.0000%
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.36300822
R Square 0.13177497
Adjusted R S 0.1282456
Standard Erro 0.022447
Observations 248

ANOVA
df SS MS F Significance F
Regression 1 0.01881275 0.01881275 37.3366821 3.8639E-09
Residual 246 0.12395148 0.00050387
Total 247 0.14276423

CoefficientsStandard Error t Stat P-value Lower 95% Upper 95% Lower 95.0%
Intercept -3.3448E-05 0.00142652 -0.0234472 0.98131257 -0.0028432 0.0027763 -0.0028432
X Variable 1 0.35975925 0.05887679 6.11037496 3.8639E-09 0.24379234 0.47572616 0.24379234
Beta
Upper 95.0%
0.0027763
0.47572616
Date NIFTY M&M DLF Reliance NIFTY M&M
Apr 01, 2021 14,867.35 798.61 289.91 2,015.37
Apr 05, 2021 14,637.80 765.83 274.96 1,986.21 -1.54% -4.10%
Apr 06, 2021 14,683.50 772.41 277.00 1,977.94 0.31% 0.86%
Apr 07, 2021 14,819.05 787.44 281.27 1,996.43 0.92% 1.95%
Apr 08, 2021 14,873.80 786.30 278.63 1,998.92 0.37% -0.14%
Apr 09, 2021 14,834.85 782.34 277.74 1,975.69 -0.26% -0.50%
Apr 12, 2021 14,310.80 743.14 245.00 1,905.02 -3.53% -5.01%
Apr 13, 2021 14,504.80 802.22 254.04 1,925.61 1.36% 7.95%
Apr 15, 2021 14,581.45 796.14 246.39 1,938.07 0.53% -0.76%
Apr 16, 2021 14,617.85 812.50 250.82 1,925.90 0.25% 2.05%
Apr 19, 2021 14,359.45 786.10 235.27 1,895.60 -1.77% -3.25%
Apr 20, 2021 14,296.40 802.12 232.88 1,895.05 -0.44% 2.04%
Apr 22, 2021 14,406.15 790.80 245.40 1,900.29 0.77% -1.41%
Apr 23, 2021 14,341.35 769.24 240.38 1,898.24 -0.45% -2.73%
Apr 26, 2021 14,485.00 771.81 245.20 1,931.64 1.00% 0.33%
Apr 27, 2021 14,653.05 769.74 252.06 1,982.27 1.16% -0.27%
Apr 28, 2021 14,864.55 773.40 249.28 1,990.90 1.44% 0.48%
Apr 29, 2021 14,894.90 765.98 247.69 2,017.56 0.20% -0.96%
Apr 30, 2021 14,631.10 744.17 245.70 1,988.10 -1.77% -2.85%

Aug 02, 2021 15,885.15 757.70 349.57 2,072.50 8.57% 1.82%

Aug 03, 2021 16,130.75 770.85 352.85 2,087.75 1.55% 1.74%
Aug 04, 2021 16,258.80 766.25 348.18 2,103.75 0.79% -0.60%
Aug 05, 2021 16,294.60 759.35 348.78 2,134.25 0.22% -0.90%
Aug 06, 2021 16,238.20 758.25 340.58 2,089.05 -0.35% -0.14%
Aug 09, 2021 16,258.25 774.95 340.03 2,077.15 0.12% 2.20%
Aug 10, 2021 16,280.10 786.30 332.09 2,088.05 0.13% 1.46%
Aug 11, 2021 16,282.25 778.70 329.40 2,117.30 0.01% -0.97%
Aug 12, 2021 16,364.40 776.20 331.89 2,110.50 0.50% -0.32%
Aug 13, 2021 16,529.10 778.65 330.45 2,145.65 1.01% 0.32%
Aug 16, 2021 16,563.05 799.30 327.52 2,173.50 0.21% 2.65%
Aug 17, 2021 16,614.60 790.65 323.24 2,164.25 0.31% -1.08%
Aug 18, 2021 16,568.85 791.35 324.98 2,172.65 -0.28% 0.09%
Aug 20, 2021 16,450.50 785.65 307.00 2,148.25 -0.71% -0.72%
Aug 23, 2021 16,496.45 765.90 306.60 2,162.35 0.28% -2.51%
Aug 24, 2021 16,624.60 778.15 315.20 2,183.70 0.78% 1.60%
Aug 25, 2021 16,634.65 772.05 307.30 2,202.60 0.06% -0.78%
Aug 26, 2021 16,636.90 781.40 307.55 2,230.45 0.01% 1.21%
Aug 27, 2021 16,705.20 775.15 311.80 2,227.40 0.41% -0.80%
Aug 30, 2021 16,931.05 791.55 319.80 2,270.25 1.35% 2.12%
Aug 31, 2021 17,132.20 793.30 320.55 2,258.15 1.19% 0.22%
Dec 01, 2021 17,166.90 834.70 383.10 2,467.00 0.20% 5.22%
Dec 02, 2021 17,401.65 849.55 385.05 2,482.85 1.37% 1.78%
Dec 03, 2021 17,196.70 836.95 386.20 2,408.25 -1.18% -1.48%
Dec 06, 2021 16,912.25 822.15 376.50 2,362.60 -1.65% -1.77%
Dec 07, 2021 17,176.70 825.95 391.20 2,381.85 1.56% 0.46%
Dec 08, 2021 17,469.75 840.75 397.70 2,418.10 1.71% 1.79%
Dec 09, 2021 17,516.85 851.10 398.60 2,456.45 0.27% 1.23%
Dec 10, 2021 17,511.30 859.70 419.10 2,458.95 -0.03% 1.01%
Dec 13, 2021 17,368.25 843.10 414.20 2,409.65 -0.82% -1.93%
Dec 14, 2021 17,324.90 836.85 417.00 2,380.15 -0.25% -0.74%
Dec 15, 2021 17,221.40 846.20 411.00 2,373.20 -0.60% 1.12%
Dec 16, 2021 17,248.40 853.30 405.15 2,403.90 0.16% 0.84%
Dec 17, 2021 16,985.20 834.60 390.20 2,340.45 -1.53% -2.19%
Dec 20, 2021 16,614.20 814.30 366.70 2,277.35 -2.18% -2.43%
Dec 21, 2021 16,770.85 812.20 372.90 2,311.25 0.94% -0.26%
Dec 22, 2021 16,955.45 818.70 377.25 2,366.10 1.10% 0.80%
Dec 23, 2021 17,072.60 826.85 383.70 2,365.25 0.69% 1.00%
Dec 24, 2021 17,003.75 812.65 379.60 2,372.80 -0.40% -1.72%
Dec 27, 2021 17,086.25 818.55 382.60 2,370.25 0.49% 0.73%
Dec 28, 2021 17,233.25 838.70 385.80 2,398.40 0.86% 2.46%
Dec 29, 2021 17,213.60 832.70 385.70 2,402.50 -0.11% -0.72%
Dec 30, 2021 17,203.95 829.30 379.20 2,359.10 -0.06% -0.41%
Dec 31, 2021 17,354.05 837.15 390.45 2,368.15 0.87% 0.95%
Feb 01, 2022 17,576.85 869.70 404.80 2,378.70 1.28% 3.89%
Feb 02, 2022 17,780.00 869.35 399.55 2,383.55 1.16% -0.04%
Feb 03, 2022 17,560.20 856.20 403.25 2,352.75 -1.24% -1.51%
Feb 04, 2022 17,516.30 841.70 399.50 2,331.30 -0.25% -1.69%
Feb 07, 2022 17,213.60 829.50 387.15 2,317.10 -1.73% -1.45%
Feb 08, 2022 17,266.75 832.05 384.55 2,356.05 0.31% 0.31%
Feb 09, 2022 17,463.80 840.20 386.35 2,383.50 1.14% 0.98%
Feb 10, 2022 17,605.85 853.05 391.15 2,381.05 0.81% 1.53%
Feb 11, 2022 17,374.75 853.65 378.60 2,376.40 -1.31% 0.07%
Feb 14, 2022 16,842.80 825.05 355.05 2,338.55 -3.06% -3.35%
Feb 15, 2022 17,352.45 854.60 371.55 2,417.95 3.03% 3.58%
Feb 16, 2022 17,322.20 864.25 367.85 2,412.95 -0.17% 1.13%
Feb 17, 2022 17,304.60 862.25 365.60 2,443.50 -0.10% -0.23%
Feb 18, 2022 17,276.30 852.00 359.65 2,424.40 -0.16% -1.19%
Feb 21, 2022 17,206.65 841.10 346.50 2,399.90 -0.40% -1.28%
Feb 22, 2022 17,092.20 853.25 324.35 2,389.00 -0.67% 1.44%
Feb 23, 2022 17,063.25 850.30 344.20 2,374.05 -0.17% -0.35%
Feb 24, 2022 16,247.95 795.80 320.50 2,255.75 -4.78% -6.41%
Feb 25, 2021 15,097.35 849.44 312.66 2,137.47 -7.08% 6.74%
Feb 25, 2022 16,658.40 807.60 348.80 2,283.95 10.34% -4.93%
Feb 26, 2021 14,529.15 797.42 300.54 2,079.11 -12.78% -1.26%
Jan 03, 2022 17,625.70 829.80 394.75 2,403.85 21.31% 4.06%
Jan 04, 2022 17,805.25 831.85 394.45 2,458.10 1.02% 0.25%
Jan 05, 2022 17,925.25 839.50 402.05 2,469.60 0.67% 0.92%
Jan 06, 2022 17,745.90 839.85 398.95 2,416.50 -1.00% 0.04%
Jan 07, 2022 17,812.70 829.00 400.60 2,436.00 0.38% -1.29%
Jan 10, 2022 18,003.30 841.95 407.95 2,438.00 1.07% 1.56%
Jan 11, 2022 18,055.75 841.40 408.85 2,455.55 0.29% -0.07%
Jan 12, 2022 18,212.35 880.55 417.55 2,521.10 0.87% 4.65%
Jan 13, 2022 18,257.80 896.00 410.80 2,535.30 0.25% 1.75%
Jan 14, 2022 18,255.75 881.20 417.35 2,539.00 -0.01% -1.65%
Jan 17, 2022 18,308.10 900.80 423.80 2,552.25 0.29% 2.22%
Jan 18, 2022 18,113.05 892.15 403.90 2,521.80 -1.07% -0.96%
Jan 19, 2022 17,938.40 894.40 408.25 2,521.60 -0.96% 0.25%
Jan 20, 2022 17,757.00 880.50 407.85 2,477.45 -1.01% -1.55%
Jan 21, 2022 17,617.15 875.20 395.10 2,477.85 -0.79% -0.60%
Jan 24, 2022 17,149.10 854.70 372.00 2,377.90 -2.66% -2.34%
Jan 25, 2022 17,277.95 854.50 380.25 2,373.25 0.75% -0.02%
Jan 27, 2022 17,110.15 858.05 374.15 2,338.10 -0.97% 0.42%
Jan 28, 2022 17,101.95 869.65 378.35 2,335.85 -0.05% 1.35%
Jan 31, 2022 17,339.85 885.80 390.90 2,386.60 1.39% 1.86%
Jul 01, 2021 15,680.00 770.77 278.44 2,097.95 -9.57% -12.99%
Jul 02, 2021 15,722.20 773.89 282.01 2,129.05 0.27% 0.40%
Jul 05, 2021 15,834.35 782.94 291.80 2,150.20 0.71% 1.17%
Jul 06, 2021 15,818.25 773.20 289.02 2,124.80 -0.10% -1.24%
Jul 07, 2021 15,879.65 770.23 292.99 2,110.05 0.39% -0.38%
Jul 08, 2021 15,727.90 767.61 285.99 2,092.60 -0.96% -0.34%
Jul 09, 2021 15,689.80 762.96 298.41 2,071.20 -0.24% -0.61%
Jul 12, 2021 15,692.60 764.25 308.94 2,084.10 0.02% 0.17%
Jul 13, 2021 15,812.35 772.46 312.17 2,099.70 0.76% 1.07%
Jul 14, 2021 15,853.95 777.40 309.78 2,086.00 0.26% 0.64%
Jul 15, 2021 15,924.20 779.90 320.51 2,082.35 0.44% 0.32%
Jul 16, 2021 15,923.40 779.80 328.66 2,112.40 -0.01% -0.01%
Jul 19, 2021 15,752.40 775.80 329.11 2,098.95 -1.07% -0.51%
Jul 20, 2021 15,632.10 760.20 320.31 2,093.80 -0.76% -2.01%
Jul 22, 2021 15,824.05 758.45 328.36 2,120.70 1.23% -0.23%
Jul 23, 2021 15,856.05 764.20 331.99 2,105.70 0.20% 0.76%
Jul 26, 2021 15,824.45 754.30 331.79 2,076.85 -0.20% -1.30%
Jul 27, 2021 15,746.45 745.55 334.82 2,055.00 -0.49% -1.16%
Jul 28, 2021 15,709.40 728.70 329.90 2,037.35 -0.24% -2.26%
Jul 29, 2021 15,778.45 731.45 337.85 2,053.25 0.44% 0.38%
Jul 30, 2021 15,763.05 743.10 335.46 2,035.30 -0.10% 1.59%
Jun 01, 2021 15,574.85 797.33 285.44 2,161.95 -1.19% 7.30%
Jun 02, 2021 15,576.20 797.23 289.02 2,194.19 0.01% -0.01%
Jun 03, 2021 15,690.35 793.12 295.72 2,202.56 0.73% -0.52%
Jun 04, 2021 15,670.25 795.64 295.03 2,183.48 -0.13% 0.32%
Jun 07, 2021 15,751.65 794.90 296.72 2,220.26 0.52% -0.09%
Jun 08, 2021 15,740.10 798.86 302.48 2,207.50 -0.07% 0.50%
Jun 09, 2021 15,635.35 795.50 295.92 2,168.03 -0.67% -0.42%
Jun 10, 2021 15,737.75 797.97 311.62 2,176.00 0.65% 0.31%
Jun 11, 2021 15,799.35 800.00 308.04 2,213.15 0.39% 0.25%
Jun 14, 2021 15,811.85 798.46 297.26 2,244.90 0.08% -0.19%
Jun 15, 2021 15,869.25 799.60 306.80 2,250.00 0.36% 0.14%
Jun 16, 2021 15,767.55 797.18 304.12 2,211.60 -0.64% -0.30%
Jun 17, 2021 15,691.40 796.73 294.98 2,215.65 -0.48% -0.06%
Jun 18, 2021 15,683.35 772.85 292.94 2,225.65 -0.05% -3.00%
Jun 21, 2021 15,746.50 768.20 300.64 2,237.25 0.40% -0.60%
Jun 22, 2021 15,772.75 766.57 294.88 2,225.75 0.17% -0.21%
Jun 23, 2021 15,686.95 773.25 291.15 2,205.35 -0.54% 0.87%
Jun 24, 2021 15,790.45 782.99 288.37 2,153.50 0.66% 1.26%
Jun 25, 2021 15,860.35 785.41 292.00 2,104.45 0.44% 0.31%
Jun 28, 2021 15,814.70 784.67 291.65 2,086.00 -0.29% -0.09%
Jun 29, 2021 15,748.45 772.90 285.34 2,087.80 -0.42% -1.50%
Jun 30, 2021 15,721.50 769.04 279.28 2,110.65 -0.17% -0.50%
Mar 01, 2021 14,761.55 810.33 305.31 2,094.96 -6.11% 5.37%
Mar 02, 2021 14,919.10 850.48 311.57 2,099.25 1.07% 4.95%
Mar 03, 2021 15,245.60 842.57 322.10 2,195.04 2.19% -0.93%
Mar 04, 2021 15,080.75 835.84 324.29 2,168.87 -1.08% -0.80%
Mar 05, 2021 14,938.10 831.05 316.04 2,171.71 -0.95% -0.57%
Mar 08, 2021 14,956.20 841.53 314.20 2,184.07 0.12% 1.26%
Mar 09, 2021 15,098.40 842.52 309.38 2,184.02 0.95% 0.12%
Mar 10, 2021 15,174.80 854.19 312.22 2,174.95 0.51% 1.39%
Mar 12, 2021 15,030.95 846.27 306.50 2,130.75 -0.95% -0.93%
Mar 15, 2021 14,929.50 835.00 302.28 2,102.14 -0.67% -1.33%
Mar 16, 2021 14,910.45 833.47 302.23 2,093.86 -0.13% -0.18%
Mar 17, 2021 14,721.30 827.63 289.27 2,048.76 -1.27% -0.70%
Mar 18, 2021 14,557.85 836.24 286.33 2,002.66 -1.11% 1.04%
Mar 19, 2021 14,744.00 840.84 285.54 2,075.32 1.28% 0.55%
Mar 22, 2021 14,736.40 843.56 290.41 2,055.79 -0.05% 0.32%
Mar 23, 2021 14,814.75 835.25 296.02 2,080.81 0.53% -0.99%
Mar 24, 2021 14,549.40 802.37 282.31 2,040.74 -1.79% -3.94%
Mar 25, 2021 14,324.90 782.89 275.21 1,985.06 -1.54% -2.43%
Mar 26, 2021 14,507.30 790.45 277.39 1,988.25 1.27% 0.97%
Mar 30, 2021 14,845.10 786.15 277.49 2,022.79 2.33% -0.54%
Mar 31, 2021 14,690.70 786.40 285.19 1,996.68 -1.04% 0.03%
May 03, 2021 14,634.15 744.57 246.25 1,952.77 -0.38% -5.32%
May 04, 2021 14,496.50 732.90 244.31 1,910.45 -0.94% -1.57%
May 05, 2021 14,617.85 739.23 246.84 1,913.94 0.84% 0.86%
May 06, 2021 14,724.80 739.08 248.88 1,924.81 0.73% -0.02%
May 07, 2021 14,823.15 758.86 256.28 1,925.56 0.67% 2.68%
May 10, 2021 14,942.35 771.76 264.38 1,920.02 0.80% 1.70%
May 11, 2021 14,850.75 767.36 263.78 1,926.95 -0.61% -0.57%
May 12, 2021 14,696.50 751.24 263.58 1,907.02 -1.04% -2.10%
May 14, 2021 14,677.80 733.25 248.93 1,931.09 -0.13% -2.39%
May 17, 2021 14,923.15 745.16 257.57 1,954.06 1.67% 1.62%
May 18, 2021 15,108.10 788.82 260.20 1,981.58 1.24% 5.86%
May 19, 2021 15,030.15 776.07 263.33 1,990.65 -0.52% -1.62%
May 20, 2021 14,906.05 794.31 265.62 1,979.03 -0.83% 2.35%
May 21, 2021 15,175.30 809.83 266.66 1,996.13 1.81% 1.95%
May 24, 2021 15,197.70 800.98 275.26 1,979.28 0.15% -1.09%
May 25, 2021 15,208.45 802.22 277.19 1,956.85 0.07% 0.15%
May 26, 2021 15,301.45 812.06 289.32 1,963.73 0.61% 1.23%
May 27, 2021 15,337.85 819.38 281.57 1,969.76 0.24% 0.90%
May 28, 2021 15,435.65 836.44 284.45 2,088.08 0.64% 2.08%
May 31, 2021 15,582.80 798.96 286.58 2,153.37 0.95% -4.48%
Nov 01, 2021 17,929.65 870.35 408.85 2,537.80 15.06% 8.94%
Nov 02, 2021 17,888.95 861.50 430.05 2,500.80 -0.23% -1.02%
Nov 03, 2021 17,829.20 849.00 429.65 2,483.60 -0.33% -1.45%
Nov 04, 2021 17,916.80 872.85 430.85 2,498.85 0.49% 2.81%
Nov 08, 2021 18,068.55 859.50 442.20 2,501.95 0.85% -1.53%
Nov 09, 2021 18,044.25 892.15 437.40 2,521.70 -0.13% 3.80%
Nov 10, 2021 18,017.20 919.65 434.50 2,549.90 -0.15% 3.08%
Nov 11, 2021 17,873.60 924.75 416.00 2,554.55 -0.80% 0.55%
Nov 12, 2021 18,102.75 937.80 428.35 2,593.10 1.28% 1.41%
Nov 15, 2021 18,109.45 928.40 424.05 2,577.80 0.04% -1.00%
Nov 16, 2021 17,999.20 960.30 423.80 2,517.90 -0.61% 3.44%
Nov 17, 2021 17,898.65 954.45 417.95 2,464.00 -0.56% -0.61%
Nov 18, 2021 17,764.80 923.70 415.90 2,473.30 -0.75% -3.22%
Nov 22, 2021 17,416.55 900.85 400.45 2,363.75 -1.96% -2.47%
Nov 23, 2021 17,503.35 901.35 407.95 2,385.85 0.50% 0.06%
Nov 24, 2021 17,415.05 893.20 403.50 2,351.40 -0.50% -0.90%
Nov 25, 2021 17,536.25 891.20 407.25 2,492.95 0.70% -0.22%
Nov 26, 2021 17,026.45 853.75 376.85 2,412.60 -2.91% -4.20%
Nov 29, 2021 17,053.95 850.80 374.85 2,441.50 0.16% -0.35%
Nov 30, 2021 16,983.20 835.50 374.80 2,405.40 -0.41% -1.80%
Oct 01, 2021 17,532.05 827.85 417.20 2,523.70 3.23% -0.92%
Oct 04, 2021 17,691.25 841.15 424.40 2,556.15 0.91% 1.61%
Oct 05, 2021 17,822.30 843.05 415.65 2,609.20 0.74% 0.23%
Oct 06, 2021 17,646.00 834.10 408.10 2,559.85 -0.99% -1.06%
Oct 07, 2021 17,790.35 878.25 422.60 2,572.40 0.82% 5.29%
Oct 08, 2021 17,895.20 877.80 415.85 2,671.25 0.59% -0.05%
Oct 11, 2021 17,945.95 895.60 424.85 2,652.65 0.28% 2.03%
Oct 12, 2021 17,991.95 890.10 429.00 2,667.80 0.26% -0.61%
Oct 13, 2021 18,161.75 935.35 427.50 2,694.95 0.94% 5.08%
Oct 14, 2021 18,338.55 931.40 434.90 2,700.40 0.97% -0.42%
Oct 18, 2021 18,477.05 910.95 441.75 2,707.60 0.76% -2.20%
Oct 19, 2021 18,418.75 917.50 414.45 2,731.85 -0.32% 0.72%
Oct 20, 2021 18,266.60 899.35 412.95 2,700.40 -0.83% -1.98%
Oct 21, 2021 18,178.10 897.00 407.10 2,622.50 -0.48% -0.26%
Oct 22, 2021 18,114.90 887.85 413.65 2,627.40 -0.35% -1.02%
Oct 25, 2021 18,125.40 890.70 401.15 2,601.80 0.06% 0.32%
Oct 26, 2021 18,268.40 894.55 415.85 2,661.05 0.79% 0.43%
Oct 27, 2021 18,210.95 886.80 414.40 2,627.40 -0.31% -0.87%
Oct 28, 2021 17,857.25 883.85 396.55 2,598.60 -1.94% -0.33%
Oct 29, 2021 17,671.65 884.25 398.60 2,536.25 -1.04% 0.05%
Sep 01, 2021 17,076.25 769.90 332.85 2,267.10 -3.37% -12.93%
Sep 02, 2021 17,234.15 752.45 338.90 2,294.40 0.92% -2.27%
Sep 03, 2021 17,323.60 749.90 343.70 2,388.50 0.52% -0.34%
Sep 06, 2021 17,377.80 754.75 345.50 2,425.60 0.31% 0.65%
Sep 07, 2021 17,362.10 753.10 336.05 2,440.90 -0.09% -0.22%
Sep 08, 2021 17,353.50 754.75 334.70 2,431.35 -0.05% 0.22%
Sep 09, 2021 17,369.25 750.75 332.95 2,425.60 0.09% -0.53%
Sep 13, 2021 17,355.30 745.55 339.65 2,371.55 -0.08% -0.69%
Sep 14, 2021 17,380.00 750.20 342.30 2,368.45 0.14% 0.62%
Sep 15, 2021 17,519.45 755.10 342.45 2,378.30 0.80% 0.65%
Sep 16, 2021 17,629.50 756.95 342.40 2,428.20 0.63% 0.25%
Sep 17, 2021 17,585.15 754.15 334.75 2,390.55 -0.25% -0.37%
Sep 20, 2021 17,396.90 738.05 323.00 2,394.35 -1.07% -2.13%
Sep 21, 2021 17,562.00 738.45 330.70 2,404.70 0.95% 0.05%
Sep 22, 2021 17,546.65 752.50 369.05 2,430.50 -0.09% 1.90%
Sep 23, 2021 17,822.95 758.45 401.85 2,489.90 1.57% 0.79%
Sep 24, 2021 17,853.20 779.45 410.45 2,482.70 0.17% 2.77%
Sep 27, 2021 17,855.10 811.35 420.00 2,524.45 0.01% 4.09%
Sep 28, 2021 17,748.60 806.05 410.05 2,548.05 -0.60% -0.65%
Sep 29, 2021 17,711.30 812.10 410.85 2,527.85 -0.21% 0.75%
Sep 30, 2021 17,618.15 803.05 417.20 2,519.25 -0.53% -1.11%
Equity Beta 0.35976
Covariance (NIFTY, Stock) 0.00059 0.00021
Variance 0.00059 0.00058
Beta (Covar/var(M) 0.36
Systematic Risk 0.0076%
Unsystematick Risk 0.0502%
Average 0.10% 0.0314072%

Regresssion Equation: M&M Return = a + b NIFTY Return

y = a + bx
where y = dependent variable; x independent variable; a is intercept and b slope

a -0.00335%
b 0.3597592502
0.0314070%

Systematic Risk = Beta^2*VAR(Market)

Unsystematic Risk =Variance (Stock)-Systmatick risk of the stock
 G-Sec
DLF Reliance Year NIFTY Nifty Return Return
2001-02 1059.05
-5.16% -1.45% 2002-03 1093.50 3.25% 7.34%
0.74% -0.42% 2003-04 1879.75 71.90% 5.71%
1.54% 0.93% 2004-05 2080.50 10.68% 6.11%
-0.94% 0.12% 2005-06 2836.55 36.34% 7.34%
-0.32% -1.16% 2006-07 3966.40 39.83% 7.89%
-11.79% -3.58% 2007-08 6138.60 54.77% 8.12%
3.69% 1.08% 2008-09 2959.15 -51.79% 7.69%
-3.01% 0.65% 2009-10 5201.05 75.76% 7.23%
1.80% -0.63% 2010-11 6134.50 17.95% 7.92%
-6.20% -1.57% 2011-12 4624.30 -24.62% 8.52%
-1.02% -0.03% 2012-13 5905.10 27.70% 8.36%
5.38% 0.28% 2013-14 6304.00 6.76% 8.45%
-2.05% -0.11% 2014-15 8282.70 31.39% 8.51%
2.01% 1.76% 2015-16 7946.35 -4.06% 7.89%
2.80% 2.62% 2016-17 8185.80 3.01% 7.25%
-1.10% 0.44% Average 19.9240% 7.6220%
-0.64% 1.34% Geometric Mean 14.6066% 7.6190%
-0.80% -1.46% Historical Risk Premium 6.9876%
Geometri [(1+r1)*(1+r2)*(1+r3)*…..(1+rn)^(1/n)]-1
42.28% 4.25% Mean
0.94% 0.74%
-1.32% 0.77%
0.17% 1.45%
-2.35% -2.12%
-0.16% -0.57%
-2.34% 0.52%
-0.81% 1.40%
0.76% -0.32%
-0.43% 1.67%
-0.89% 1.30%
-1.31% -0.43%
0.54% 0.39%
-5.53% -1.12%
-0.13% 0.66%
2.80% 0.99%
-2.51% 0.87%
0.08% 1.26%
1.38% -0.14%
 2.57% 1.92%
0.23% -0.53%
19.51% 9.25%
0.51% 0.64%
0.30% -3.00%
-2.51% -1.90%
3.90% 0.81%
1.66% 1.52%
0.23% 1.59%
5.14% 0.10%
-1.17% -2.00%
0.68% -1.22%
-1.44% -0.29%
-1.42% 1.29%
-3.69% -2.64%
-6.02% -2.70%
1.69% 1.49%
1.17% 2.37%
1.71% -0.04%
-1.07% 0.32%
0.79% -0.11%
0.84% 1.19%
-0.03% 0.17%
-1.69% -1.81%
2.97% 0.38%
3.68% 0.45%
-1.30% 0.20%
0.93% -1.29%
-0.93% -0.91%
-3.09% -0.61%
-0.67% 1.68%
0.47% 1.17%
1.24% -0.10%
-3.21% -0.20%
-6.22% -1.59%
4.65% 3.40%
-1.00% -0.21%
-0.61% 1.27%
-1.63% -0.78%
-3.66% -1.01%
 -6.39% -0.45%
6.12% -0.63%
-6.89% -4.98%
-2.45% -5.24%
11.56% 6.85%
-13.84% -8.97%
31.35% 15.62%
-0.08% 2.26%
1.93% 0.47%
-0.77% -2.15%
0.41% 0.81%
1.83% 0.08%
0.22% 0.72%
2.13% 2.67%
-1.62% 0.56%
1.59% 0.15%
1.55% 0.52%
-4.70% -1.19%
1.08% -0.01%
-0.10% -1.75%
-3.13% 0.02%
-5.85% -4.03%
2.22% -0.20%
-1.60% -1.48%
1.12% -0.10%
3.32% 2.17%
-28.77% -12.09%
1.28% 1.48%
3.47% 0.99%
-0.95% -1.18%
1.37% -0.69%
-2.39% -0.83%
4.34% -1.02%
3.53% 0.62%
1.05% 0.75%
-0.77% -0.65%
3.46% -0.17%
2.54% 1.44%
0.14% -0.64%
-2.67% -0.25%
 2.51% 1.28%
1.11% -0.71%
-0.06% -1.37%
0.91% -1.05%
-1.47% -0.86%
2.41% 0.78%
-0.71% -0.87%
-14.91% 6.22%
1.25% 1.49%
2.32% 0.38%
-0.23% -0.87%
0.57% 1.68%
1.94% -0.57%
-2.17% -1.79%
5.31% 0.37%
-1.15% 1.71%
-3.50% 1.43%
3.21% 0.23%
-0.87% -1.71%
-3.01% 0.18%
-0.69% 0.45%
2.63% 0.52%
-1.92% -0.51%
-1.26% -0.92%
-0.95% -2.35%
1.26% -2.28%
-0.12% -0.88%
-2.16% 0.09%
-2.12% 1.09%
9.32% -0.74%
2.05% 0.20%
3.38% 4.56%
0.68% -1.19%
-2.54% 0.13%
-0.58% 0.57%
-1.53% 0.00%
0.92% -0.42%
-1.83% -2.03%
-1.38% -1.34%
-0.02% -0.39%
 -4.29% -2.15%
-1.02% -2.25%
-0.28% 3.63%
1.71% -0.94%
1.93% 1.22%
-4.63% -1.93%
-2.51% -2.73%
0.79% 0.16%
0.04% 1.74%
2.77% -1.29%
-13.65% -2.20%
-0.79% -2.17%
1.04% 0.18%
0.83% 0.57%
2.97% 0.04%
3.16% -0.29%
-0.23% 0.36%
-0.08% -1.03%
-5.56% 1.26%
3.47% 1.19%
1.02% 1.41%
1.20% 0.46%
0.87% -0.58%
0.39% 0.86%
3.23% -0.84%
0.70% -1.13%
4.38% 0.35%
-2.68% 0.31%
1.02% 6.01%
0.75% 3.13%
42.67% 17.85%
5.19% -1.46%
-0.09% -0.69%
0.28% 0.61%
2.63% 0.12%
-1.09% 0.79%
-0.66% 1.12%
-4.26% 0.18%
2.97% 1.51%
-1.00% -0.59%
 -0.06% -2.32%
-1.38% -2.14%
-0.49% 0.38%
-3.71% -4.43%
1.87% 0.93%
-1.09% -1.44%
0.93% 6.02%
-7.46% -3.22%
-0.53% 1.20%
-0.01% -1.48%
11.31% 4.92%
1.73% 1.29%
-2.06% 2.08%
-1.82% -1.89%
3.55% 0.49%
-1.60% 3.84%
2.16% -0.70%
0.98% 0.57%
-0.35% 1.02%
1.73% 0.20%
1.58% 0.27%
-6.18% 0.90%
-0.36% -1.15%
-1.42% -2.88%
1.61% 0.19%
-3.02% -0.97%
3.66% 2.28%
-0.35% -1.26%
-4.31% -1.10%
0.52% -2.40%
-16.50% -10.61%
1.82% 1.20%
1.42% 4.10%
0.52% 1.55%
-2.74% 0.63%
-0.40% -0.39%
-0.52% -0.24%
2.01% -2.23%
0.78% -0.13%
0.04% 0.42%
 -0.01% 2.10%
-2.23% -1.55%
-3.51% 0.16%
2.38% 0.43%
11.60% 1.07%
8.89% 2.44%
2.14% -0.29%
2.33% 1.68%
-2.37% 0.93%
0.20% -0.79%
1.55% -0.34%
1.87 0.88
0.00110 0.00052
0.00355 0.00070
1.87 0.88
0.0740% 0.0853%
0.2809% -0.0156%
 1.03 1.07
1.72 1.06
1.11 1.06
1.36 1.07
1.40 1.08
1.55 1.08
0.48 1.08
1.76 1.07
1.18 1.08
0.75 1.09
1.28 1.08
1.07 1.08
1.31 1.09
0.96 1.08
1.03 1.07

+rn)^(1/n)]-1
Weighted Average Cost of Capital (Discounting Rate for project evaluation)

Capital Type Value Weight Cost Weighted Average

Debt 80087 65.82% 7.62% 3.51%
Equity 41582 34.18% 9.29% 3.17%
121669 100.00% WACC 6.68% This is the discount rate

Interest 6102
Debt 80087
Avg Rate 7.62%

Cost of equity RF+Beta(Avg Market Risk Premium)

Beta (M&M) 0.36
RF (from RBI website) 6.77% as on 2nd March 2022
Market Risk Premium 7% from Day 13 sheet
Cost of equity 9.29%

M&M DLF RIL

Equity Beta 0.3597592501556 1.8736851 0.88139476
Debt/Total Capital 65.82% 15.62% 29.07%
Equity/Total Capital 34.18% 84.38% 70.93%
Asset Beta (Real Estate Beta) 1.63 0.71
Assumption: Debt beta=.3

If M&M enters into Real

Estate Business with Debt 4.09 3.74
65% and Equity of 35%,
Equity Beta

If M&M enters into Petro

Chemical Business with Debt 1.48
65% and Equity of 35%,
Equity Beta
Loan 6563 270648
Equity 35444 660329
42007 930977

Industry Beta (hotel industry)

Company Beta D/TC E/TC Asset Beta Market cap
Indian Hotel 1.27 60.19% 39.81% 0.51 27320
EIH Ltd 1.02 14.15% 85.85% 0.88 7908
35228
Assumption is beta of the debt = .3

A Japanese company wants to invest in Korean automobile industry. How do you compute Equity Beta of the investments?

Japanese Risk Free rate

Japanese Stock Index Return and Korean automobile industry index return; using these two, compute the beta of the asset
Historical average Japanese Stock Index Return less Japanese Govt securities return

A Japanese company wants to invest in Japan automobile industry. How do you compute Equity Beta of the investments?

Japanese Risk Free rate

Japanese Stock Index Return and Japanese automobile industry index return; using these two, compute the beta of the asset
Historical average Japanese Stock Index Return less Japanese Govt securities return
 Capital Type Weight Cost Weighted Average Capital Type Weight Cost
Debt 65.00% 7.62% 3.47% Debt 65.00% 7.62%
Equity 35.00% 35.38% 12.38% Equity 35.00% 32.93%
his is the discount rate 100.00% WACC 15.85% 100.00% WACC
If M&M takes up a Real Estate business with 65% If M&M takes up a Real Estate business with 65%
debt and 35% equity, the discount rate to be used in debt and 35% equity, the discount rate to be used in
evaluating real estate projects is 15.85% in a world evaluating real estate projects is 14.99% in a world
of no-taxes of taxes

•b(asset) or beta (100% equity)= b(D) D/V + b(E) E/V

1.63 = (.3*65%)+(B(E)*35%)

Market capWeighted
weight Avg asset beta
0.77551947 0.39
 0.22448053 0.20
1 0.59

ity Beta of the investments?

mpute the beta of the asset

y Beta of the investments?

ompute the beta of the asset

 Weighted Average
3.47%
11.53%
14.99%
tate business with 65%
scount rate to be used in
cts is 14.99% in a world
es
Net Income Theory Unlevered Levered Highly Levered
Equity @ 15% 100 80 20
Debt @ 8% 0 20 80 Assumption: Debt holders will continue to demand 8% interest wh
100 100 100 Assumption: Equity holders will continue to demand 15% equity c
Conclusion: Borrow as much as possible
PBIT 40 40 40
Interest 0 1.6 6.4
PBT 40 38.4 33.6
Taxes 0 0 0
PAT 40 38.4 33.6

WACC
Equity 100% 80% 20%
Debt 0% 20% 80%
WACC 15.00% 13.60% 9.40%

Value of Firm
Value of Equity 266.67 256.00 224.00
Value of Debt 0.00 20.00 80.00
266.67 276.00 304.00

Net Operating Income Theory

Assumption: Debt holders will continue to demand 8% interest wh
Equity 100 80 20 Assumption: Equity holders will demand more equity cost when th
Debt @ 8% 0 20 80 How much more? The incremental cost of equity is eq
100 100 100 Conclusion: It doesn't matter and you can borrow any amount; cap

PBIT 40 40 40
Interest 0 1.6 6.4
PBT 40 38.4 33.6
Taxes 0 0 0
PAT 40 38.4 33.6

Cost
Cost of Equity 15% 16.75% 43.00%
Cost of debt 8% 8% 8%
WACC 15.00% 15.00% 15.00%

Value of Firm
Value of Equity 266.67 246.67 186.67
Value of Debt 0.00 20.00 80.00
Value of Firm 266.67 266.67 266.67

Traditional Theory
 Assumption: Debt holders will demand no increase in
Equity 100 80 20 70 Assumption: Equity holders will demand no increase
Debt @ 8% 0 20 80 30 Conclusion: Optimal capital structure is at a place wh
100 100 100 100
At lower debt level, Net Income theory holds good an
PBIT 40 40 40 40
Interest 0 1.6 6.4 2.4
PBT 40 38.4 33.6 37.6
Taxes 0 0 0 0
PAT 40 38.4 33.6 37.6

Cost
Cost of Equity 15% 15.00% 20.00% 15.00%
Cost of debt 8% 8% 13% 8%
WACC 15.00% 13.60% 14.40% 12.90%

Value of Firm
Value of Equity 266.67 274.12 197.78 280.08
Value of Debt 0.00 20.00 80.00 30.00
Value of Firm 266.67 294.12 277.78 310.08

M&M Arbitrage Unlevered Levered Highly Levered

Equity @ 15% 100 80 20
Debt @ 8% 0 20 80 Assume you have 10% stake in Highly Levered Firm
100 100 100 Your share of PAT is 10% of 33.6 or 3.36
Assume you sell your 10% stake and realized 10% of 2
PBIT 40 40 40 By selling the stake in highly levered company, you ar
Interest 0 1.6 6.4 Now, you borrow at 8% interest on your personal acc
PBT 40 38.4 33.6 Add the cash you have (22.40) and the load you got a
Taxes 0 0 0 With 40.32, you buy the shares of Unlevered compan
PAT 40 38.4 33.6 Since the profit after tax of the company is 40, your s
Less Interest to be paid at 8% on the loan 22.40
WACC Net benefit for shifting from highly levered company
Equity 100% 80% 20% Earlier benefit of remaining in the Highly levered com
Debt 0% 20% 80% Incremental benefit of shifting
WACC 15.00% 13.60% 9.40%
Substituting personal leverage to the corpoate levera
Value of Firm
Value of Equity 266.67 256.00 224.00
Value of Debt 0.00 20.00 80.00
266.67 276.00 304.00
o demand 8% interest whether the firm borrowed 20% of the capital or 80% of the capital
to demand 15% equity cost whether the firm borrowed 20% of the capital or 80% of the capital

o demand 8% interest whether the firm borrowed 20% of the capital or 80% of the capital
more equity cost when the firm increases the debt from 20% to 80%
mental cost of equity is equal to the benefit of the debt
n borrow any amount; capital structure decision is irrelevant
will demand no increase in interest rate initially when the debt levels are low but will start demanding higher interest rate at higher debt le
will demand no increase in cost of equity initially when the debt levels are low but will start demanding higher cost of equity at higher de
structure is at a place where WACC is the lowest

ome theory holds good and at higher debt level NOI theory holds good

in Highly Levered Firm

33.6 or 3.36
ake and realized 10% of 224 or 22.40
levered company, you are also relieved the indirect debt obligation
rest on your personal account to an extent of 80% of 22.40 17.92
0) and the load you got at 8% interest rate (17.92) and you have 40.32
res of Unlevered compan 15.12% stake
he company is 40, your share is equal 6.05
% on the loan 22.40 1.79
highly levered company to unlevered 4.26
in the Highly levered company 3.36
0.90

ge to the corpoate leverage

er interest rate at higher debt level
igher cost of equity at higher debt level