Calculate your allocated company’s cost of equity capital using the Capital Asset Pricing Model (CAPM), explaining and justifying, in detail, your choice of data to use in the calculation.
CORPORATE FINANCE of GKN PLC
(1) Calculate your allocated company’s cost of equity capital using the Capital Asset Pricing Model (CAPM), explaining and justifying, in detail, your choice of data to use in the calculation.
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(2) Calculate your allocated company’s asset beta, and calculate and discuss how much the risk-free rate, business risk and financial risk contribute to your company’s overall cost of equity finance.
(3) Critically evaluate and discuss whether the capital structure of your allocated company can be described as optimal.
[Total: 100 marks]
(1) You must obtain a copy of your allocated company’s most recent Annual Report. This can be done through internet sources such as ft.com on, by accessing your allocated company’s own web page, or by other methods covered on the module
(2) Your assignment must be word-processed and no more than 2,500 words in length.
(3) All information used in your assignment must be sourced and referenced. Photocopy and include in an appendix any relevant financial data you have used. All books, journals or electronic data systems (including web addresses) used in the preparation of your report must be clearly and appropriately referenced in footnotes using academic referencing. All quotations made directly from books, journals or other information media must be clearly acknowledged by the use of footnotes and quotation marks.