| Kassatly Chtaura in 2013 (Professor estimates) |
| CAPM estimate of the weighted-average cost of capital |
| | Cost of Equity (KC has 7M cash savings onhand) | | | | | | Amount of Equity | | | Beer | Saudi | Angola |
| | | Riskfree rate | | 2.85% | | | | Value | | 5000 | 7000 | 7000 |
| | | Beer Beta | | 1.50 |
| | | Saudi Beta | | 1.20 |
| | | Angola Beta | | 2.00 |
| | | Market return | | 13.46% |
| | | Lebanon Cost of Equity | | 18.77% |
| | | Saudi Cost of Equity | | 15.58% | | | *Saudi project does not require debt because the company can invest cash and get 8M from Saudi investor |
| | | Angola Cost of Equity | | 24.07% | | | Amount of Debt |
| | | | | | | | | Value | | 10000 | 0 | 8000 |
| | Cost of Debt |
| | | Rate | | 7.40% | | | Total Capital needed | | | 15000 | 7000 | 15000 |
| | | Taxrate | | 15% |
| | | Cost of Debt | | 6.29% |
| | | | | | Project |
| | | | | Beer | Saudi | Angola |
| | WACC | | | 10.45% | 15.58% | 14.59% |
| Notes: | 1. Professor's Beta estimates based on risk of investment (feel free to challenge this, or change it) |
| | 2. risk free rate based on 2013 data from https://tradingeconomics.com/lebanon/risk-premium-on-lending-prime-rate-minus-treasury-bill-rate-percent-wb-data.html |
| | 3. Since the relevant cost of equity in this situation seems to be the opportunity cost of equity reinvested into the business, Professor used annualized growth rate (2M to 25M over 20 years = 13.46%) Feel free to challenge this or change it if your team has a better estimate. |
| | 4. For cost of debt, Prof used the Lebanon bank lending rate from 2013 https://www.ceicdata.com/en/indicator/lebanon/bank-lending-rate |
| | 5. Business tax rate in Lebanon was 15% in 2013, Individual rate 20% |
sinister670
projectvaluationworksheet.xls
