Cost-of-Capital.docx - PROJECT REPORT FINANCIAL MANAGEMENT 2016 1 Cost of Capital Submitted by Group 1 Ayus Pokharel Jaya Shrestha Kanchan KC Yesna

Cost-of-Capital.docx - PROJECT REPORT FINANCIAL MANAGEMENT...

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PROJECT REPORT, FINANCIAL MANAGEMENT, 2016 1 Cost of Capital Submitted by: Group 1 Ayus Pokharel, Jaya Shrestha, Kanchan KC, Yesna Maharjan and Astha Joshi BBA 4 th Semester, Batch: 2014-2018 Kathmandu College of Management, Lalitpur, Nepal. March, 2016 This Report has been Prepared with the Support Provided by Global IME Bank, Panipokhari. Ref.: KCM-25-2015 Provided by Kathmandu College of Management, Gwarko, Lalitpur, Nepal. Tel. +977 1 5201997, +977 1 5201434, Email kcm.edu.np, and Submitted to Kathmandu College of Management for the Fulfillment of Requirements for the BBA Program of Siam University, Thailand.
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PROJECT REPORT, FINANCIAL MANAGEMENT, 2016 2 Acknowledgement We would like to express special thanks of gratitude to our teacher Mr. Sitaram Dhakal as well as our principal Mr. Bishnu Raj Adhikari who gave us the golden opportunity to do this wonderful project on the topic Financila Management, which also helped us in doing a lot of research; as we came to know about so many new things for which we are really thankful for.
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PROJECT REPORT, FINANCIAL MANAGEMENT, 2016 3 Table of Contents: Table of Figures: .......................................................................................................................................... 4 Acronyms .................................................................................................................................................... 5 Introduction ................................................................................................................................................. 6 Cost of Debt: .......................................................................................................................................... 6 Cost of Equity: ....................................................................................................................................... 6 Tax rate: ................................................................................................................................................. 7 Tax Effect: .............................................................................................................................................. 7 Weighted Average Cost of Capital: ....................................................................................................... 7 Objectives of the Report .............................................................................................................................. 8 Limitations of the Report ............................................................................................................................. 8 Data Analysis ............................................................................................................................................... 9 Conclusion and Recommendations ............................................................................................................ 11 References ................................................................................................................................................. 12 Annex ........................................................................................................................................................ 13
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PROJECT REPORT, FINANCIAL MANAGEMENT, 2016 4 Table of Figures: Figure 1: 2013/2014 GBIL Balance Sheet ..................................................................................... 13 Figure 2: 2013/2014 Profit and Loss Appropriation Account ....................................................... 14 Figure 3: 2013/2014 GBIL Debenture and Bonds ......................................................................... 15 Figure 4: 2013/2014 GBIL Interest Expenses ............................................................................... 15 Figure 5: 2013/2014 GBIL Annual Profit and Loss Account ........................................................ 16
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PROJECT REPORT, FINANCIAL MANAGEMENT, 2016 5 Acronyms PV Present Value FV Future Value PMT Annual Payment IRR Internal Rate of Return NPV Net Present Value COD Cost of Debt COE Cost of Equity WACC Weighted Average Cost of Capital GIBL Global IME Bank Ltd. DPS Dividend per Share EPS Earning per Share
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PROJECT REPORT, FINANCIAL MANAGEMENT, 2016 6 Introduction Global IME Bank Ltd. (GIBL) was introduced after the merger of Global Bank Ltd (an “A” class commercial bank), IME Financial Institution (a “C” class finance company) and Lord Buddha Finance Ltd. (a “C” class finance company) in the year 2012. It later merged with banks such as Social Development Bank, Gulmi Bikas Bank and Commerz and Trust Bank Nepal Ltd.
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