Estimate WACC for your selected firm (year 2016) Target: Collect and estimate firm's cost of equity, cost of debt, and weighted cost of capital using the model we learned. process raw data in stock market and Required components for the report: Part 1: Select a listed firm from stock market and introduce the firm's related information. Part 2: Introduce your data (source, frequency etc.) Part 3: Estimate firm's cost of equity (annual rate) using CAPM model 5+p(,-5) First, collect historical stock returns of the firm (e.g. previous 5 years daily return) and run regression of the firm's return on the market return (market index), the coefficient is the estimated Beta of the firm. Second, use the end year return in year 2016 as the current return, choose the proper risk free rate (R) and estimate cost of equity for the firm (r). Part 4: Estimate firm's cost of debt (annual rate). Part 5: Decide the weight of equity and weight of debt by looking at the source of firm's financing. Part 6: Choose the corporate tax rate and now you are ready to compute firm's WACC. Part 7: Conclusions. Requirement: 3-4 students as a group and everyone must work on the project Every group needs to prepare a report describing your work and a PowerPoint file for a 15 minute presentation (Start in week 16, Dec. 22d) Estimate WACC for your selected firm (year 2016) Target: Collect and estimate firm's cost of equity, cost of debt, and weighted cost of capital using the model we learned. process raw data in stock market and Required components for the report: Part 1: Select a listed firm from stock market and introduce the firm's related information. Part 2: Introduce your data (source, frequency etc.) Part 3: Estimate firm's cost of equity (annual rate) using CAPM model 5+p(,-5) First, collect historical stock returns of the firm (e.g. previous 5 years daily return) and run regression of the firm's return on the market return (market index), the coefficient is the estimated Beta of the firm. Second, use the end year return in year 2016 as the current return, choose the proper risk free rate (R) and estimate cost of equity for the firm (r). Part 4: Estimate firm's cost of debt (annual rate). Part 5: Decide the weight of equity and weight of debt by looking at the source of firm's financing. Part 6: Choose the corporate tax rate and now you are ready to compute firm's WACC. Part 7: Conclusions. Requirement: 3-4 students as a group and everyone must work on the project Every group needs to prepare a report describing your work and a PowerPoint file for a 15 minute presentation (Start in week 16, Dec. 22d)
