Finance

Financials from Kuwait Stock Exchange and if not from their mention from where

1.Find the Beta coefficient of the stock.
b. Compare to the published Beta
c. Reasons for difference, if any?

2. Find the required rate of return for your company.
a. Use the CAPM method to determine the cost of equity
b. Use the Treasury 10 year Bond as the risk free rate
c. Calculate market risk premium and the firm risk premium.

3. Determine growth rate of the company’s EPS and/or Dividends.
a. ROE*(1-DPR) = GROWTH
b. Calculate growth rate and compare to analysts’.
c. Look at the various sites on the web to compare your growth forecast with

d. What do you think about your growth rate? How close are your estimates to the
actual?

4. Calculate the W.A.C.C. of the company
a. Use data from the financial statements.
b. Use published interest rates on the notes to the financial statements.

5. Predict the price of the common stock using models provided. Is the company
maximizing the wealth of the shareholder? If not, what can they do achieve this result?
a. Discuss differences of actual vs. calculated stock price.
b. If the firm has non-constant growth, then assume a constant growth rate at the
end of the tenth year.
c. Please include the Free Cash Flow method along with the traditional approaches.
When doing the valuation part, you should youse the following three methods.
Discounted Cash Flow Method (FCF method)
Dividend Growth Model
Multiple Analysis

6. Is the Capital structure of this firm optimal?
a. Is W.A.C.C. minimized?
b. Is stock price maximized?
c. What capital structure will maximize the wealth of the shareholder? (You need to
Calculate)

7. Conclusion
a. What observations did you notice from your data?
b. Did your data have differences from actual pricing?
c. What reasons can you give for differences of actual vs. calculated data?
d. Is this company doing all it can to maximize the wealth of the shareholder? If not,
what do they need to do? If so, what are they doing right?
e. Final thoughts on this Firm.