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Assignment 1

This document contains calculations and analysis related to an assignment on mergers and acquisitions. It includes a WACC calculation for a company with market value of equity of Rs. 18,784.64 and debt of Rs. 2,686.03. It also contains calculations of cost of equity using the CAPM model and an embedded growth calculation. Regression analysis is performed to calculate beta using the company's returns compared to a market index.

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Swapnil
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© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
55 views

Assignment 1

This document contains calculations and analysis related to an assignment on mergers and acquisitions. It includes a WACC calculation for a company with market value of equity of Rs. 18,784.64 and debt of Rs. 2,686.03. It also contains calculations of cost of equity using the CAPM model and an embedded growth calculation. Regression analysis is performed to calculate beta using the company's returns compared to a market index.

Uploaded by

Swapnil
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Name: Swapnil Kamble

Roll No.: 17-MF-14

Subject: Mergers & Acquisition

Assignment No. 1

WACC Calculations:

Market Value Weightage Cost WACC


Equity 18,784.64 87.49% 13.952% 12.21%
Debt 2,686.03 12.51% 7.107% 0.74%
12.94%

Cost of Equity:

K e = Rf +  ( R m - R f )

Rf = 8.1%
Rm - Rf = 7.7%
 = 0.76

Cost of Equity = 8.1% + ( 0.76 * 7.7% ) = 13.952%

Calculated Beta:

Calculated = 0.76

Published Beta:

Source Beta Value


Topstockresearch 0.643
Reuters 0.27
Edelweiss 0.74
Economictimes 0.95
Yahoo Finance 1.08

Embedded g:

D1 = 2.58

Ke = 13.952%

P = 665.65

P = D1 / K - g

g = 13.56%
Regression Output:

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.3483
R Square 0.1213
Adjusted R
Square 0.1206
Standard
Error 0.0179
Observation
s 1235.0000

ANOVA
Significanc
df SS MS F eF
170.192
Regression 1 0.0547 0.0547 9 0.0000
Residual 1233 0.3962 0.0003
Total 1234 0.4509

Coefficient Standar Upper Lower Upper


s d Error t Stat P-value Lower 95% 95% 95.0% 95.0%
29.864 0.131 0.115 0.131
Intercept 0.1233 0.0041 8 0.0000 0.1152 4 2 4
13.045 0.876 0.647 0.876
X Variable 1 0.7620 0.0584 8 0.0000 0.6474 6 4 6

Scatter Chart:

Returns of Glenmark Vs Nifty500


0.04

0.02

0
-0.2 -0.15 -0.1 -0.05 0 0.05 0.1

-0.02

-0.04

-0.06

-0.08

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