Business Case Studies, Financial Management & Corporate Finance Case Study, Ambuja Cements, Cost of Capital

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Case Title:

Ambuja Cements: Weighted Average Cost of Capital

Publication Month & Year : July 2009

Authors: Manish Agarwal & D. Satish

Industry: Cement

Region:India

Case Code: FM0011

Teaching Note: Available

Structured Assignment: Available

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Abstract:
The case study was primarily written to explain one of the core concepts of finance –Cost of Capital.Though there are many methods to calculate the costof capital, Weighted Average Cost of Capital (WACC) is widely used. The case study brings the concept of WACC through a discussion between a professor and his students. It further explains the importance of estimating cost of capital and capital mix. It further helps the learners to know the intricacies of estimating cost of equity, cost of debt and deciding on the appropriate weights with Ambuja Cements – one of India's biggest cement manufacturers, as the backdrop.

Pedagogical Objectives:

  • To understand the relevance of cost of capital in financing decisions
  • To understand how to estimate the cost of equity, debt and cost of capital
  • To understand the importance of capital mix, in WACC approach.

Keywords : Cost of capital; Cost of Equity; Cost of Debt; Weighted Average Cost of Capital; WACC; Capital Asset Pricing Model; CAPM; GDR; MBA; Financial Management; Finance for Managers; Managerial Finance; Business Finance; Corporate Finance; Principles of Financial Management; Course Case Maps; Course Case Packs; Financial Management Course Case Pack; Financial Management Course Case Map

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