The Group is provided with the last 5-year financial information of NTPC Limited along with their approximately last 5 years share prices.Click here to access the excel. Click here to access the 5-year financial information of NTPC(Use Capital Assets Pricing Model (CAPM) to estimate its cost of Equity – Cost of Equity = Risk-Free Rate+(Market Rate - Risk-Free Rate) x Beta; For Market Return use BSE SENSEX (data is provided) and take risk-free rate as 6.65% per annum. For calculating the Market Annual Return from Daily returns, use 250 as the number of working days. Also, use the following formula to calculate return from pricesReturn = [(Price today – Price of the previous day)/ Price of the previous day]Required:a) Valuation of the Company using Dividend Discount Model (use only constant growth model) Dividend Data is given in the attached EXCEL file. While calculating the intrinsic value of NTPC share, use the formula g = Return on Equity ´Retention Rate to calculate the growth rate. After the calculation of the growth rate then compute valuation using the Dividend Discount Model.
Question
The Group is provided with the last 5-year financial information of NTPC Limited along with their approximately last 5 years share prices.Click here to access the excel. Click here to access the 5-year financial information of NTPC(Use Capital Assets Pricing Model (CAPM) to estimate its cost of Equity – Cost of Equity = Risk-Free Rate+(Market Rate - Risk-Free Rate) x Beta; For Market Return use BSE SENSEX (data is provided) and take risk-free rate as 6.65% per annum. For calculating the Market Annual Return from Daily returns, use 250 as the number of working days. Also, use the following formula to calculate return from pricesReturn = [(Price today – Price of the previous day)/ Price of the previous day]Required:a) Valuation of the Company using Dividend Discount Model (use only constant growth model) Dividend Data is given in the attached EXCEL file. While calculating the intrinsic value of NTPC share, use the formula g = Return on Equity ´Retention Rate to calculate the growth rate. After the calculation of the growth rate then compute valuation using the Dividend Discount Model.
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