Choose a company from the London Stock exchange
1. Give a brief historical overview of the company (research beyond the company website/annual reports is required)
2. Describe the current business activities
3. How has capital structure changed over the last 5 years? Identify and describe changes in the capital structure
4. Identify and discuss the major investments/divestments made by the company over the past five years.
5. Briefly describe how these investments were funded.
6. Estimate the ordinary equity beta, explain any assumptions you make and identify the sources of any information used in your calculations. Explain the meaning of the beta value obtained.
7. Use the capital asset pricing model to estimate the cost of ordinary equity for the company, explain any assumptions you make and identify the source of any information used in your calculations. Provide limitations of using this model.
8. Estimate the (nominal after-tax) weighted average cost of capital for the company. Explain any assumptions that you make and identify the source of any information used in your calculations. Explain the implications of WACC on the value of the firm.
9. Use the dividend discount model to estimate the value per ordinary share for the company as of 30/09/2022. Justify any assumptions you make. How does your estimate compare to the prevailing share price of the firm as at that date? What factors might account for any difference?