2014 03 22 Caso Frozen Food Costo de Capital
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Company Equity β Equity Debt Debt/Equity Ratio Unlevered β Advanta India td. 0.5472 3,744.20 5,738.30 1.53 0.26 Britannia Industries td. 0.2638 5,200.40 281.50 0.05 0.25 GlaxoSmithkline 0.0959 11,441.80 - - 0.10 Jubilant 0.9856 2,995.50 - - 0.99 Kwality 0.6357 910.50 4,248.00 4.67 0.15 Rei Agro 0.5393 23,611.80 38,540.50 1.63 0.25 Venky 0.6690 3,157.90 985.70 0.31 0.55 Zydus 0.5372 1,868.60 - - 0.54 • Exp[ Unlevered β] : Donde: BL is the firm's beta with leverage. Tc is the corporate tax rate. >> 30% D/E is the company's debt/equity ratio. Unlevered β >> 0.39 • Levered β = Unlevered β*(1+(1-T_c)*D/E) Apalancando Unlevered β con la estructura de capital de la Empresa cuando la razón deuda-patrimonio es constante, 1 a 3 : Levered β >> 0.48 • Cost of Equity = Risk free rate + Levered_β*Risk premium Donde: Risk premium (survey estimate) 8.0% Risk free rate (India) 8.0% Cost of Equity (k_p) >> 11.8% • WACC: Donde: Re = cost of equity Rd = cost of debt (see income statement) >> 8.0% E = market value of the firm's equity D = market value of the firm's debt V = E + D E/V = percentage of financing that is equity
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Transcript of 2014 03 22 Caso Frozen Food Costo de Capital
Company Equity β Equity Debt Debt/Equity Ratio Unlevered β
Advanta India td. 0.5472 3,744.20 5,738.30 1.53 0.26
Britannia Industries td. 0.2638 5,200.40 281.50 0.05 0.25
GlaxoSmithkline 0.0959 11,441.80 - - 0.10
Jubilant 0.9856 2,995.50 - - 0.99
Kwality 0.6357 910.50 4,248.00 4.67 0.15
Rei Agro 0.5393 23,611.80 38,540.50 1.63 0.25
Venky 0.6690 3,157.90 985.70 0.31 0.55
Zydus 0.5372 1,868.60 - - 0.54
• Exp[ Unlevered β] :
Donde:
BL is the firm's beta with leverage.
Tc is the corporate tax rate. >> 30%
D/E is the company's debt/equity ratio.
Unlevered β >> 0.39
• Levered β = Unlevered β*(1+(1-T_c)*D/E)
Apalancando Unlevered β con la estructura de capital de la Empresa
cuando la razón deuda-patrimonio es constante, 1 a 3 :
Levered β >> 0.48
• Cost of Equity = Risk free rate + Levered_β*Risk premium
Donde:
Risk premium (survey estimate) 8.0%
Risk free rate (India) 8.0%
Cost of Equity (k_p) >> 11.8%
• WACC:
Donde:
Re = cost of equity
Rd = cost of debt (see income statement) >> 8.0%
E = market value of the firm's equity
D = market value of the firm's debt
V = E + D
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate tax rate >> 30%
WACC >> 10.3%
Projected Income Statement
Year 1 2 3
revenue 4400 4900 5400
expenses 2400 2700 3000
EBITDA 2000 2200 2400
Interest payments @8% 165 175 185
Depreciation @ 15% 900 945 983
Profit Before Tax 935 1080 1232
Tax @30% 281 324 370
Profit Ater Tax 655 756 862
Projected Balance Sheet
Year 0 1 2 3
Equity 6000 6375 6754 7104
Debt 2000 2125 2251 2368
Total liability 8000 8500 9005 9472
Gross Fixed Assets 6000 7200 8400 9600
Less Acccumulated Depreciation 0 900 1845 2828
Net Fixed Assets 6000 6300 6555 6772
Working Capital 2000 2200 2450 2700
Total Assets 8000 8500 9005 9472
Razón deuda-patrimonio es constante 1:3
Equity % 75% 75% 75% 75%
Debt % 25% 25% 25% 25%
Levered β 0.48 0.48 0.48 0.48
Cost of Equity (k_p) 11.8% 11.8% 11.8% 11.8%
WACC 10.3% 10.3% 10.3% 10.3%
PV_flujos - 594.08 621.90 643.15
NPV
4 5
5900 6400
3300 3600
2600 2800
194 202
1016 1043
1390 1554
417 466
973 1088
4 5
7429 7734
2476 2578
9905 10312
10800 12000
3844 4887
6956 7113
2950 3200
9906 10313
75% 75%
25% 25%
0.48 0.48
11.8% 11.8%
10.3% 10.3%
658.44 667.78
3,185.35
