Now you need to estimate FVW

$$

s cost of equity. Once again, the problem is that it is a private company,

so its equity returns are not directly observable. This means that you cannot use OLS regression to

estimate FVW

$$

s beta directly. As before, you decide to follow a peer firm approach, using the same

three comparison firms as before. Your plan is to estimate the equity beta for each of those firms, and

then to convert their equity betas into unlevered betas. Thereafter, you intend to calculate an average

of the unlevered betas for the comparison firms, which you will use as a proxy for FVW

$$

s unlevered

beta. Next, you plan to convert this proxy unlevered beta into an equity beta for FVW

$,$

$$using its debt

$-$

to

$-$

equity ratio. Finally, the estimated value for FVW

$$

s equity beta will be used to determine its cost of

capital.

The worksheet Market Data contains monthly observations for the Interbank Overnight Cash Rate

$($

ONCR

$)$

$,$

$$for the period from January

$2$

$0$

$1$

$5$

$$to April

$2$

$0$

$2$

$3$

$,$

$$as well as monthly values for the S&P

$/$

ASX

$3$

$0$

$0$

Index

$($

XKO

$)$

$,$

$$and monthly share prices for Australian Vintage

$($

AVG

$)$

$,$

$$Lark Distilling

$($

LRK

$)$

$,$

$$and Treasury

Wine Estates

$($

TWE

$)$

$.$

$$The cash rate data was downloaded from the website of the Reserve Bank of

Australia, and everything else was download from Yahoo Finance. The index values and the share prices

have been adjusted for dividends, so the price returns you calculate using that data will include the

effect of dividends.

The worksheet Question

$4$

$$provides a space for you to estimate FVW

$$

s cost of equity. Use the data in

Market Data worksheet to estimate the equity betas for the three comparison firms. To unlever those

betas, you will need the debt

$-$

to

$-$

equity ratios for the comparison firms. The easiest way to get them is

by clicking FINANCIALS tab on the Wall Street Journal page for each of the firms. This will take you to a

page that presents the financial ratios for the firm.

Once you have obtained FVW

$$

s unlevered beta, as a weighted average of the unlevered betas of the

comparison firms, and you have used FVW

$$

s debt

$-$

to

$-$

equity ratio to convert its unlevered beta back

into a

$($

levered

$)$

$$equity beta, you are ready to use the SML equation to calculate its cost of equity. For

this you will need estimates for the risk

$-$

free rate and the risk premium on the market portfolio in

Australia. These values can be obtained from MarketRiskPremia.com.

State your estimate for FVW

$$

s cost of equity in your report and explain you obtained it

$.$

$$You should

present the details of your beta estimates for the comparison firms, including scatter plots and graphs

of the best fit lines for the regressions, as part of your explanation. You should also provide the outputs

from your regressions in your report and explain the regression results.

ALL i want is is the estimate Equity betas for XLOR, Australian vintage, lark distilling and Treasury wines. Can you provide a solution using regresion model like CAPM to estimate. You would need to find the montly return for each stock, use ONCR as risk free rate but convert it to monthly as it in annual rate. Also i think you would need to find out excess stock returns by doing stock returns

$-$

$$ONCR after converted to montly to help find the CAPM

please complete the entire market data to find the CAPM

$/$

$$equity beta for each of those firms.READ THE PROMPT ABOVE TO HAVE A CLEARER UNDERSANDING of what is required. Provide calculations and steps not just explanation pleaseee