Course Code: -FINM542 Course Instructor :-Dr.

Rohit Bansal

Academic Task No: - 2 Course Title :-Corporate Finance

Date of Submission: - 30/09/2022 Section :- Q2252

Students Name:-

Registration Number Roll Number Student Name Peer Rating

12201116 RQ2252A01 Gannabathula Bindu 9/10
Phanindra
12201237 RQ2252A02 Rahul Kumar Singh 10/10
12202372 RQ2252A04 Vanshika Kapoor 9/10
12201934 RQ2252A05 Sanyam Prasher 9/10

Mittal School of Business, MBA2022 Page 1

Learning Outcomes

I would like to express my special thanks of gratitude to my teacher Dr.Rohit Bansal, who gave
me this golden opportunity to do this wonderful Assignment on “Calculation of Equity, cost of
debt capital, cost of preference share and weighted average cost of capital”. We came to
learn Calculation and Analysis of Different Companies Financial Positions through calculation.

Declaration

I declare that this Assignment is our individual group work .We have not copied it from any
other students work or from any other source except where due acknowledgement is made
explicitly in the text, nor has any part been written for us by any other person.

Student’s signature:

Evaluator’s comments: -

General Observation Suggestion for Improvement Best part of Assignment

Mittal School of Business, MBA2022 Page 2

Cost of Equity: - Cost of equity is the return that a company requires for an investment or
project, or the return that an individual requires for an equity investment.

Cost of Debt Capital: - The cost of debt is the effective interest rate that a company pays on its
debts, such as bonds and loans. The cost of debt can refer to the before-tax cost of debt, which is
the company's cost of debt before taking taxes into account, or the after-tax cost of debt.

Cost of Preference Capital: - Cost of preference share capital is that part of cost of capital in
which we calculate the amount which is payable to preference shareholders in the form of
dividend with fixed rate.

Weighted Average cost of capital: - Weighted average cost of capital (WACC) represents a
firm's average after-tax cost of capital from all sources, including common stock, Reserves,
preference shares, Debentures, bonds and other forms of debt. WACC is the average rate that a
company expects to pay to finance its assets

Cost of Equity (dividend discount model)

Yea DIV1 P0 Current Past Current g Next year Ke(DDM)=

r dividens dividen rate – divident Div1/P0+g*1
t ts previous =DIV0*(1+ 00
rate g)
202 80
2 113.4 869 63 35 28 80 113.4 93.04948

𝐷𝐼𝑉
Cost of equity (KE)(DDM)= 𝑃 1 + 𝑔
𝑂

DIV1= Dividend paid next year

Next year dividend (DIV1)=DIV0*(1+g)

P0=Market price of the company on NSE

g=growth rate of dividend payout

𝐷𝐼𝑉1
cost of equity = +𝑔
𝑃𝑂

113.4
= 869 + .80

==0.93

Into percentage =0.93*100=93%

Mittal School of Business, MBA2022 Page 3

Cost of equity (CAPM):-

Ke(CAPM)=Rf + β *[Rm – Rf]

Rf =risk free rate of interest

Beta =systematic risk

Rm=return from market or index

(Rm-Rf)=Market risk Premium

Ke =7.310+0.987*[17.47-4.06]

Ke= 20.54567

Cost of Equity using earning price ratio method:-

EPS (symphony)= 20.44 million

Market per share =869

Earning Price Ratio=Earnings per share (EPS)/Market per share

20.44/869=.02352

Cost of debt: -

symphony interest expense for march 2022 was 89.2 million.

Total book value of debt in 2022 was 2366.2 million.

𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡
Cost of debt = 𝑡𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡

Mittal School of Business, MBA2022 Page 4

Cost of preference share: -
𝐵𝑛−𝐵𝑜
𝑛
Cost redeemable preference share =PDIV+ 𝐵𝑛−𝐵𝑜 *100
2

Bn= Redemption Price

Bo=Issue Price

PDIV= Preference dividend

Cost of Irredeemable preference share =Preference dividend (PDIV)/issue price (Po)

Bn= Redemption Price

Bo=Issue Price

PDIV= Preference dividend

Mittal School of Business, MBA2022 Page 5

No preference share issued by the company.

Weighted Avarage cost of Capital(WACC):-

WACC:-We*Ke+Wp*Kp+Wd*Kd(1-T)+Wr*Kr

Total capital issued through equity :- 13.99 crore

Authorized capital :-15 crore

𝑒𝑞𝑢𝑖𝑡𝑦
Weighted of equity =
𝑡𝑜𝑡𝑎𝑙 𝑐𝑎𝑝𝑖𝑡𝑎𝑙

13.99
= 15

= 0.9326
𝑟𝑒𝑠𝑒𝑟𝑣𝑒
Weighted of Reserve:-𝑇𝑜𝑡𝑎𝑙 𝑐𝑎𝑝𝑖𝑡𝑎𝑙

9.04
= 15

=.6026
𝐷𝑒𝑏𝑡
Weighted debt:- 𝑇𝑜𝑡𝑎𝑙 𝑐𝑎𝑝𝑖𝑡𝑎𝑙

𝑝𝑟𝑒𝑓𝑒𝑟𝑒𝑛𝑐𝑒 𝑠ℎ𝑎𝑟𝑒
Weighted Preference Share= 𝑡𝑜𝑡𝑎𝑙 𝑐𝑎𝑝𝑖𝑡𝑎𝑙

Mittal School of Business, MBA2022 Page 6

 𝐷𝑒𝑏𝑒𝑛𝑡𝑢𝑟𝑒
Weighted Debenture= 𝑇𝑜𝑡𝑎𝑙 𝑐𝑎𝑝𝑖𝑡𝑎𝑙

Weighted Avarage cost of Capital(WACC)=

WACC:-We*Ke+Wp*Kp+Wd*Kd(1-T)+Wr*Kr

We=weighted of equity

Ke=cost of equity

Wp=weighted of capital

Kp=cost of preference share

wr= weighted reserve

kr = cost of reserve

Mittal School of Business, MBA2022 Page 7

WACC (2022)=93.04948*0.9326+0*0+0*0+93.04948*.6026

=86.777945048+56.071616648

=142.849561696

Evaluation:-

The company is best with no debts.

The WACC tells us the return that lenders and share holders expect to receive in return for
providing capital to a company ,and in case of symphony it is good with 142.84.

Mittal School of Business, MBA2022 Page 8

References: -

1. Company financial statement

2. Company income statement
3. https://trendlyne.com/fundamentals/documents-annual-
reports/1341/SYMPHONY/symphony-ltd/
4. https://www.google.com/search?q=cost+of+capital&oq=cost+of+capital&aqs=chrome..6
9i57j0i512l9.4627j0j7&sourceid=chrome&ie=UTF-8
5. https://www.google.com/search?q=cost+of+debt+meaning&sxsrf=ALiCzsbWZ3gh75Us
U1dyqC56fXKwmgK4QA%3A1664550212619&ei=RAU3Y9mzJYnV4-
EPzoCfuA0&oq=cost+of+de&gs_lcp=Cgdnd3Mtd2l6EAEYADIECCMQJzIECCMQJzI
LCAAQsQMQgwEQkQIyBQgAEJECMgUIABCRAjIFCAAQgAQyBQgAEIAEMgUI
ABCABDIFCAAQgAQyBQgAEIAEOgoIABBHENYEELADOgcIABCwAxBDOgoIA
BCABBCHAhAUOgQIABBDOgsIABCABBCxAxCDAUoECEEYAEoECEYYAFCxB
VjjFmCYMWgBcAF4AIABwAGIAZ4MkgEDMC45mAEAoAEByAEKwAEB&sclient
=gws-wiz
6. https://www.google.com/search?q=cost+of+reseeve+meaning&sxsrf=ALiCzsba_ttwPYa
HKN_nVtwN9PNVaKOdJA%3A1664550232764&ei=WAU3Y6SdLvn04-
EPkfWt8AE&ved=0ahUKEwikqdbq5Lz6AhV5-
jgGHZF6Cx4Q4dUDCA4&uact=5&oq=cost+of+reseeve+meaning&gs_lcp=Cgdnd3Mtd
2l6EAMyCgghEMMEEAoQoAEyCgghEMMEEAoQoAE6CggAEEcQ1gQQsAM6Bwg
AELADEEM6BwgjELACECc6BAgAEA06BggAEB4QBzoICAAQHhAPEAc6BQgAEI
AEOggIABAeEAgQBzoKCAAQHhAIEAcQCjoKCAAQHhAPEAgQBzoFCAAQogQ6
BwgAEB4QogRKBAhBGABKBAhGGABQ0QdY0x9gvypoAXABeACAAZQGiAHCF
pIBCTAuNS41LjYtMZgBAKABAcgBCsABAQ&sclient=gws-wiz
7. Grow App
8. https://www.google.com/search?q=cost+of+preference+share+capital+meaning&oq=cost
+of+preference+share+capital+meaning&aqs=chrome.0.69i59j0i390l4.9842j0j4&sourcei
d=chrome&ie=UTF-8
9. https://www.google.com/search?q=5-
year+treasury+yield+india&sxsrf=ALiCzsboP4hZs5rZd2iGul6AQT0iOJtoeA%3A16646
15068089&ei=nAI4Y__5BI-
UseMPiMS6kAo&ved=0ahUKEwj_t8iu1r76AhUPSmwGHQiiDqIQ4dUDCA4&uact=5
&oq=5-
year+treasury+yield+india&gs_lcp=Cgdnd3Mtd2l6EAMyBQgAEKIEMgUIABCiBDIF
CAAQogQyBQgAEKIEOgoIABBHENYEELADOgcIABAeEKIESgQIQRgASgQIRhg
AUNwGWNAmYOA9aAJwAXgBgAHxAYgB0Q6SAQUwLjcuM5gBAKABAcgBCM
ABAQ&sclient=gws-wiz

Mittal School of Business, MBA2022 Page 9