ANKOLI CONSULTANT: A CASE STUDY ON THE USE OF BOTTOM-UP BETA AND MARKET VALUE OF DEBT FOR ESTIMATING THE COST OF CAPITAL OF A FIRM
Aman Pushp, Saumya Singh, Bhakti Agarwal
PhD Scholar, Symbiosis Institute of Business Management, Pune; Symbiosis International (Deemed) University, Pune, India.
Abstract
This Case study discusses corporate valuation using Capital Asset Pricing Method (CAPM). CAPM provides an initial framework to answer the relationship between the risk and the expected return of an investment. The Beta calculated is the systematic risk affecting the firm, varying from security to security. CAPM has multiple applications, including allocation of capital for the real asset, financial investment, capital expenditure, corporate restructuring, and portfolio evaluation. In this case, we are trying to understand the firm’s valuation for merger and acquisition. To have a systematic understanding, we will use the CAPM model, and the Beta will be calculated from two different methods Historical and Bottom-Up beta. In addition, applying market value weights for the cost of capital is also used.
Keywords: Capital Asset Pricing Method; CAPM, Historical (levered) Beta; Bottom-Up beta; Market Value Weight.
Journal Name :
VIEW PDF
EPRA International Journal of Multidisciplinary Research (IJMR)
VIEW PDF
Published on : 2022-10-26
Vol | : | 8 |
Issue | : | 10 |
Month | : | October |
Year | : | 2022 |