Weighted Average Cost of Capital for Shree Cement Limited
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Code : FAC0055
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Region : India
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Abstract: The case study ‘Weighted Average Cost of Capital of Shree Cement Limited’ provides a fundamental understanding of the Weighted Average Cost of Capital (WACC), cost of equity, and cost of debt. The case helps to understand various methods of calculating the cost of equity such as the Capital Asset Pricing Model (CAPM) and the Dividend Discounted Model (DDM). It also covers the estimation of cost of equity using fundamental beta which is applicable in case of an unlisted firm. The case is based on a discussion between a group of first-year MBA students and Dr. John Martin (Martin), a professor of Finance. The discussion starts with the concept of cost of equity and gradually leads to WACC. The case concludes with parameters being set for the students to calculate the cost of equity using various methods, cost of debt, and ultimately WACC for Shree Cements Limited. |
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Pedagogical Objectives:
Keywords : Cost of Equity, Cost of Debt, Cost of Capital, Beta WACC, CAPM, DDM, Levered Beta, Unlevered Beta, Risk free rate, Market return
