Calculation of the Cost of Debt of ABCL Ltd.

Year
1980
1981
1982
1983
1984
Interest Paid
0.54
1.09
1.79
2.13
3.08
Long term debt
4.11
7.89
8.5
9.74
20.02
Short term debt
1.9
2.26
4.51
12.88
9.11
Total debt
6.01
10.15
13.01
22.62
29.13
Tax rate = 35 % --- Assumed since the tax rate from PAT is variable which is not possible
Tax rate
0.35
Cost of debt ( in% ) (Interest
* (1-Tax rate)/Total Debt)
Average Cost of Debt
Average Cost of Debt ( in % )

5.84%
0.068965
6.89%

6.98%

8.94%

6.12%

6.87%

1985
2.66
18.08
8.03
26.11

6.62%

Cost of Equity based on DGM

Year
1980
1981
1982
1983
1984
1985
EPS
41.17
49.34
51.68
48.45
57.45
60.51
DPS
17
20
20
20
20
22
PAT
3.63
4.35
4.56
4.28
5.07
5.34
Share Capital
8.82
8.82
8.82
8.82
8.82
8.82
Reserves
8.11
10.7
13.5
16.01
18.6
22
Net Worth
16.93
19.52
22.32
24.83
27.42
30.82
Market Value -High432.5
412.5
450
398.75
465
785
Market Value -Low 205
302.5
375
317.5
362.5
442.5
Market Value -Avg318.75
357.5
412.5 358.125
413.75
613.75
DPSt+1 /Pt
0.062745 0.055944 0.048485 0.055846 0.053172 0.039797844
Div pay out ratio
0.412922
(DPS/EPS)0.405351 0.386997 0.412797 0.348129 0.363576268
Retention
Ratio = b =
(1-Div Pay
out
Ratio)
0.587078 0.594649 0.613003 0.587203 0.651871 0.636423732
Return
on
Equity
(PAT/Net

0.214412 0.222848 0.204301 0.172372 0.184902 0.173264114

g( b * r)
0.125877 0.132517 0.125237 0.101217 0.120532 0.110269394
Ke
0.188622 0.188461 0.173722 0.157064 0.173704 0.150067238
Average Ke
0.17194
Average Ke ( in %17.20%
)

Calculation of Ke based on CAPM

Calculation of Market rate of return:

Year

Month
Sept
Oct
Nov
1980 Dec
1981 Jan
Feb
Mar
Apr
May

High

Low
245
295
300
335
325
330
407.5
412.5
407.5

205
255
285
310
305
302.5
340
380
385

Average Market
225
162.4
275
156.1
292.5
157.2
322.5
166.7
315
170.9
316.25
172.1
373.75
178.2
396.25
186.7
396.25
190.5

ABCL's
cummulative
monthly
returns
0.200670695
0.061693569
0.09763847
-0.023530497
0.003960401
0.167054085
0.0584582
0
-0.028801991

Jun
Jul
Aug
Sep
Oct
Nov
Dec

390
392.5
382.5
400
400
396.3
400

380
385
372.5
375
390
387.5
395

385
388.75
377.5
387.5
395
391.9
397.5

193.8
198.5
194.6
185.5
188.8
192.7
193

0.009693129
-0.029365895
0.02614528
0.019169916
-0.00787906
0.014188229
0.007893294

1982 Jan
Feb
Mar
Apr
May
Jun
Jul

405
432.5
430
406
400
400
388.8

396.3
397.5
402.5
380
386.3
375
380

400.65
415
416.25
393
393.15
387.5
384.4

193.8
192.1
189.8
184
182.7
176.3
172.1

0.035190292
0.003007521
-0.057476429
0.000381607
-0.01447537
-0.008032172
-0.001692378

Aug
Sep
Oct
Nov
Dec
1983 Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
1984 Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct

387.5
390
392.5
392.5
392.5
398.8
395
395
366.5
350
360
367.5
375
382.5
382.5
377.5
380
455
455
386.3
390
383.8
397.5
398.8
397.5
400
425

380
377.5
387.5
385
382.5
397.8
391.3
372.5
320
317.5
350
348.1
346.3
377.5
372.5
375
375
380
380
380
382.5
362.5
368.8
395
343.8
396.3
396.8

383.75
383.75
390
388.75
387.5
398.3
393.15
383.75
343.25
333.75
355
357.8
360.65
380
377.5
376.25
377.5
417.5
417.5
383.15
386.25
373.15
383.15
396.9
370.65
398.15
410.9

178.4
179.2
180.9
181
188
185.4
181.5
180.7
178
189.2
199.5
197.2
197.1
196.9
197
200.3
206.6
209.1
205.4
204.4
199.4
195.6
198.4
210.3
208.2
205.8
210.4

0
0.01615544
-0.003210276
-0.003220615
0.027489641
-0.013014272
-0.02419992
-0.111532254
-0.028066835
0.06172558
0.007856382
0.007933788
0.052263294
-0.006600684
-0.003316753
0.003316753
0.100713976
0
-0.085857987
0.008058271
-0.034504345
0.026446074
0.035257802
-0.068426139
0.071570598
0.031521057
-0.011381142

Nov
Dec
1985 Jan
Feb
Mar
Apr
May
Jun
AVERAGE

410
465
450
452
525
605
580
625

402.5
405
442.5
442.5
445
500
565
567.5

406.25
435
446.25
447.25
485
552.5
572.5
596.25

209.2
212.4
223.3
231.3
244
264.7
283.2
319.4

0.017097538

Rm=Average Monthly cummulative Return of Market* 12

Rm= 0.142396
Rm= 0.142396
Covariance of Market and ABCL= 0.000508
Variance of Market= 0.001051
Calculation of
= Covariance of Market and ABCL / Variance of the Market
0.483575
Calculation of Cost of Equity based on CAPM Model
Assumption: The risk free rate of return i.e. Rf is assumed to be 5 %
which is the rate of return from a 90 day treasury bill.
Rf
Ke = Rf +
(Rm-Rf)*
Ke in %

0.068377297
0.025533302
0.002238389
0.081031169
0.130304542
0.035559302
0.040647307

0.05
0.09468
9.50%

Market's
Cummulative
monthly
Return
-0.0395656
0.007022052
0.05867691
0.0248828
0.006997113
0.034830812
0.046596536
0.020149144
0.017174505

0.023962401
-0.01984293
-0.047891288
0.017633372
0.020446322
0.001555613
0.004136511
-0.00881063
-0.012045184
-0.031035129
-0.007090294
-0.035658374
-0.024111386
0.035952517

0.00447428
0.009441892
0.000552639
0.037944932
-0.01392631
-0.021259999
-0.004417456
-0.015054647
0.061021106
0.05300958
-0.011595794
-0.000507228
-0.001015229
0.000507743
0.016612514
0.030968314
0.01202805
-0.017853309
-0.004880439
-0.024766001
-0.0192411
0.014213437
0.058249888
-0.010035927
-0.011594333
0.022105657
-0.005719749

0.015180557
0.050044869
0.03519941
0.053452656
0.081428884
0.067556253
0.120290874
0.011866348

Calculation of WACC
Year
Share Capital
Reserves
Total Equity
Long term debt
Short term debt
Total debt
Equity weightage
Debt weightage
Avg Equity
Avg Debt
Equity weightage (Xe)
Debt weightage (Xd)
Cost of Equity ( based on DGM )
Cost of Debt
WAAC = ( Xe * Ke + Xd * Kd )
WAAC = ( Xe * Ke + Xd * Kd ) in %

1980
1981
8.82
8.82
8.11
10.7
16.93
19.52
4.11
7.89
1.9
2.26
6.01
10.15
0.738012206 0.6579
0.405259609 0.53506
23.64
17.83833333
0.569936111
0.430063889
0.172
0.069
0.127703419
12.78%

1982
1983
1984
1985
8.82
8.82
8.82
8.82
13.5
16.01
18.6
22
22.32
24.83
27.42
30.82
8.5
9.74
20.02
18.08
4.51
12.88
9.11
8.03
13.01
22.62
29.13
26.11
0.63176 0.523288 0.484881 0.541367
0.59597 0.719466 0.767589 0.747495

BIMETAL
EPS
DPS
Share Capital
Reserves
Net Worth
PAT
Market Value
High
Low
Average
DPSt+1 /Pt
Div pay out ratio (DPS/EPS)
Retention Ratio = b = (1-Div Pay
out Ratio)
Return on Equity , r(PAT/Net
Worth)
g( b * r)
Ke
Average Ke ( based on DGM )
Average Ke ( in % )

1980
4.94
2.7
1.27
2.25
3.52
0.63

1981
7.69
2.7
1.27
2.88
4.15
0.98

1982
9.44
1.8
1.91
3.8
5.71
1.81

1983
7.48
2
1.91
4.85
6.76
1.43

1984
3.98
1.8
1.91
5.27
7.18
0.76

1985
7.24
2.1
1.91
6.25
8.16
1.38

50
49
36
39.5
43
90
32
38
25
28
34
38
41
43.5
30.5
33.75
38.5
64
0.065854 0.041379 0.065574 0.053333 0.054545 0.036752
0.546559 0.351105 0.190678 0.26738 0.452261 0.290055
0.453441 0.648895 0.809322

0.73262 0.547739 0.709945

0.178977 0.236145 0.316988 0.211538 0.10585 0.169118

0.081156 0.153233 0.256545 0.154977 0.057978 0.120064
0.147009 0.194612 0.322119 0.208311 0.112523 0.156816
0.190232
19%

ANTIFRICTION
EPS
DPS
Share Capital
Reserves
Net Worth
PAT
Market Value
High
Low
Average
DPSt+1 /Pt
Div pay out ratio (DPS/EPS)
Retention Ratio = b = (1-Div Pay
out Ratio)
Return on Equity , r(PAT/Net
Worth)
g( b * r)
Ke
Average Ke ( based on DGM )
Average Ke ( in % )

1980
10.94
1.7
1.47
3.42
4.89
1.63

1981
5.97
1.7
1.47
4.24
5.71
0.93

1982
2.94
1.4
2.2
3.85
6.05
0.7

1983
3.61
1.4
2.2
4.33
6.53
0.85

1984
0.23
1.4
2.2
4.03
6.23
0.05

1985
0.67
1
2.2
3.95
6.15
0.2

46.5
50
30
28.5
27
50
30
28
20.5
8.5
23.5
21
38.25
39
25.25
18.5
25.25
35.5
0.044444 0.035897 0.055446 0.075676 0.039604 0.027718
0.155393 0.284757 0.47619 0.387812 6.086957 1.492537
0.844607 0.715243

0.52381 0.612188

-5.08696

-0.49254

0.333333 0.162872 0.115702 0.130168 0.008026

0.281536 0.116493 0.060606 0.079688 -0.04083
0.32598 0.152391 0.116052 0.155363 -0.00122
0.126711
12.67

0.03252
-0.01602
0.0117

FAG PRECISION
EPS
DPS
Share Capital
Reserves
Net Worth
PAT
Market Value
High
Low
Average
DPSt+1 /Pt
Div pay out ratio (DPS/EPS)
Retention Ratio = b = (1-Div Pay
out Ratio)
Return on Equity , r(PAT/Net
Worth)
g( b * r)
Ke
Average Ke ( based on DGM )
Average Ke ( in % )

1980
45.03
10
1.67
2.73
4.4
0.75

1981
34.88
13
1.67
3.1
4.77
0.58

1982
-43.26
0
1.67
2.38
4.05
-0.72

152
165
106
130
129
147.5
0.100775
0
0.222074 0.372706

177
110
143.5
0
0

0.777926 0.627294

0.170455 0.121593
0.132601 0.076275
0.233376 0.076275
0.119978
12

1983
-15.44
0
1.67
2.12
3.79
-0.26

1984
31.81
12
1.67
2.45
4.12
0.53

1985
70.5
14
1.67
3.39
5.06
1.18

114
112.5
225
74
62
102.5
94
87.25
163.75
0.12766 0.160458 0.101475
0 0.37724 0.198582
1

0.62276 0.801418

-0.17778
-0.0686 0.128641 0.233202
-0.17778
-0.0686 0.080112 0.186892
-0.17778 0.059058 0.240571 0.288367

Year
1980
1981
1982
1983
Interest Paid
0.11
0.12
0.46
0.58
Long term debt
0.8
1.08
2.99
3.39
Short term debt
0
0.32
0
1.57
Total debt
0.8
1.4
2.99
4.96
Tax rate = 35 % --- Assumed since the tax rate from PAT is variable which is not possible
Tax rate
0.35
Cost of debt ( in% ) (Interest * (1-Tax
rate)/Total Debt)
8.94%
5.57%
10.00%
7.60%
Average Cost of Debt
0.077912
Average Cost of Debt ( in % )
7.79%
For 1986 DPS = DPS of 1985 * (1+g of 1985)

2.352135

1984
0.75
1.9
5.17
7.07

1985
0.91
1.99
5.65
7.64

6.90%

7.74%

Year
1980
1981
1982
1983
Interest Paid
0.57
0.9
1
1.23
Long term debt
3.23
3.59
3.63
5.04
Short term debt
2.63
2.78
2.75
4.05
Total debt
5.86
6.37
6.38
9.09
Tax rate = 35 % --- Assumed since the tax rate from PAT is variable which is not possible
Tax rate
0.35
Cost of debt ( in% ) (Interest * (1-Tax
rate)/Total Debt)
6.32%
9.18%
10.19%
8.80%
Average Cost of Debt
0.09091
Average Cost of Debt ( in % )
9.09%
For 1986 DPS = DPS of 1985 * (1+g of 1985)

0.983983

1984
1.83
5.53
5.78
11.31

1985
1.83
5.95
6.52
12.47

10.52%

9.54%

Year
1980
1981
1982
1983
Interest Paid
0.6
0.71
1.82
1.53
Long term debt
0.96
3.46
4.62
5.69
Short term debt
3.02
4.02
5.61
4.47
Total debt
3.98
7.48
10.23
10.16
Tax rate = 35 % --- Assumed since the tax rate from PAT is variable which is not possible
Tax rate
0.35
Cost of debt ( in% ) (Interest * (1-Tax
rate)/Total Debt)
9.80%
6.17%
11.56%
9.79%
Average Cost of Debt
0.093656
Average Cost of Debt ( in % )
9.36%
For 1986 DPS = DPS of 1985 * (1+g of 1985)

16.61649

1984
1.64
6.34
5.51
11.85

1985
1.79
5.26
6.52
11.78

9.00%

9.88%

Calculation of WACC
BIMETAL
Year
Share Capital
Reserves
Total Equity
Long term debt
Short term debt
Total debt
Equity weightage
Debt weightage
Avg Equity
Avg Debt
Equity weightage (Xe)
Debt weightage (Xd)
Cost of Equity ( based on DGM )
Cost of Debt
WAAC = ( Xe * Ke + Xd * Kd )
WAAC = ( Xe * Ke + Xd * Kd ) in %

ANTI FRICTION
Year
Share Capital
Reserves
Total Equity
Long term debt
Short term debt
Total debt
Equity weightage
Debt weightage
Avg Equity
Avg Debt
Equity weightage (Xe)
Debt weightage (Xd)
Cost of Equity ( based on DGM )
Cost of Debt
WAAC = ( Xe * Ke + Xd * Kd )
WAAC = ( Xe * Ke + Xd * Kd ) in %

FAG PRECISION
Year
Share Capital

1980
1981
1982
1983
1.27
1.27
1.91
1.91
2.25
2.88
3.8
4.85
3.52
4.15
5.71
6.76
0.8
1.08
2.99
3.39
0
0.32
0
1.57
0.8
1.4
2.99
4.96
0.814815 0.747748 0.656322 0.576792
0.185185 0.252252 0.343678 0.423208
5.913333
4.143333
0.588001
0.411999
0.068965
0.17194
0.111391

1984
1.91
5.27
7.18
1.9
5.17
7.07
0.50386
0.49614

11.14%

1980
1981
1982
1983
1984
1.47
1.47
2.2
2.2
2.2
3.42
4.24
3.85
4.33
4.03
4.89
5.71
6.05
6.53
6.23
3.23
3.59
3.63
5.04
5.53
2.63
2.78
2.75
4.05
5.78
5.86
6.37
6.38
9.09
11.31
0.454884 0.472682 0.486726 0.418054 0.355188
0.799454
0.8125 0.74359 0.805137 0.837158
5.926667
8.58
0.408548
0.591452
0.126711
0.09091
0.111391
10.55%

1980
1.67

1981
1.67

1982
1.67

1983
1.67

1984
1.67

Reserves
Total Equity
Long term debt
Short term debt
Total debt
Equity weightage
Debt weightage
Avg Equity
Avg Debt
Equity weightage (Xe)
Debt weightage (Xd)
Cost of Equity ( based on DGM )
Cost of Debt
WAAC = ( Xe * Ke + Xd * Kd )
WAAC = ( Xe * Ke + Xd * Kd ) in %

2.73
3.1
2.38
2.12
2.45
4.4
4.77
4.05
3.79
4.12
0.96
3.46
4.62
5.69
6.34
3.02
4.02
5.61
4.47
5.51
3.98
7.48
10.23
10.16
11.85
0.52506 0.389388 0.283613 0.271685 0.257984
0.704425 0.817486 0.859664 0.858833 0.876479
4.365
9.246667
0.320681
0.679319
0.119978
0.093656
0.102097
10.21%

1985
1.91
6.25
8.16
1.99
5.65
7.64
0.516456
0.483544

1985
2.2
3.95
6.15
5.95
6.52
12.47
0.33029
0.850034

1985
1.67

3.39
5.06
5.26
6.52
11.78
0.300475
0.875836