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i) PAT -  4000 Cr ii) Tangible Fixed Assets -3300 Cr iii) Depreciation 8.5 % iv) Identifiable Intangible other than brand -1200 Cr v) Risk Premium – 5 % vi) Return from Market is 10 % vii) Beta of the company –Double the market viii) Tax rate – 20 % ix) Debenture Interest Rate is 9 % ) Debt : Equity is in the ratio of 3:2 xi) Expected normal return on Tangible Assets ( Weighted Average Cost of capital + 25 % of the Cost of Debt Post Tax xii ) Appropriate Capitalization rates for Intangibles – 22 %   Determine the possible value of Brand as per Potential Earnings Model

i) PAT -  4000 Cr ii) Tangible Fixed Assets -3300 Cr iii) Depreciation 8.5 % iv) Identifiable Intangible other than brand -1200 Cr v) Risk Premium – 5 % vi) Return from Market is 10 % vii) Beta of the company –Double the market viii) Tax rate – 20 % ix) Debenture Interest Rate is 9 % ) Debt : Equity is in the ratio of 3:2 xi) Expected normal return on Tangible Assets ( Weighted Average Cost of capital + 25 % of the Cost of Debt Post Tax xii ) Appropriate Capitalization rates for Intangibles – 22 %   Determine the possible value of Brand as per Potential Earnings Model

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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  1. i) PAT -  4000 Cr
  2. ii) Tangible Fixed Assets -3300 Cr
  3. iii) Depreciation 8.5 %
  4. iv) Identifiable Intangible other than brand -1200 Cr
  5. v) Risk Premium – 5 %
  6. vi) Return from Market is 10 %
  7. vii) Beta of the company –Double the market
  8. viii) Tax rate – 20 %
  9. ix) Debenture Interest Rate is 9 %
  10. ) Debt : Equity is in the ratio of 3:2
  11. xi) Expected normal return on Tangible Assets ( Weighted Average Cost of capital + 25 % of the Cost of Debt Post Tax
  12. xii ) Appropriate Capitalization rates for Intangibles – 22 %

 

Determine the possible value of Brand as per Potential Earnings Model                                 

 

 

 

 

 

 

 

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