Calculate the Hurdle rate /WACC for Lupin ltd

Experiential Learning Assignment Calculate the Hurdle rate /WACC for a listed firm Calculate the cost of equity capital: 1. Take historical monthly adjusted closing prices for the company from yahoo finance for 3-5 years 2. Calculate the monthly returns Ln(Pt/Pt-1) 3. Take historical monthly adjusted closing prices for market index and calculate monthly returns 4. Run a regression with dependent variable as target company monthly returns and independent variable as market returns 5. The beta (coefficient of market return) is the beta levered for the firm 6. Calculate the cost of equity capital using CAPM model 7. Risk free rate can be taken as ytm of government bond , you can go to http://www.epwrfits.in/TreeViewSecurity.aspx or http://faculty.iima.ac.in/~iffm/Indian-Fama-French-Momentum/ Calculate cost of debt: 8. Calculate cost of debt (wither ytm of corporate bond) or synthetic rating Calculate EBIT/Interest expense and go to the following link http://pages.stern.nyu.edu/~adamodar/New_Home_Page/valquestions/syntrating.htm for credit default spread Add credit default spread to risk free rate for cost of debt 9. Calculate market value of debt from book value of debt for target company 10. Calculate market value of equity for target company Calculate the cost of capital for the firm: 11. Calculate WACC using the WACC formula