__Ammad Ali and Muhammad Hassam__

1. In the HUBC file, the beta of 0.75 was for the current
capital structure but in the calculations you have assumed it for 0 leverage

2. The cost of debt was supposed to increase by 5 percentage
point with each increase of 10% in weight of debt, in your calculations, you
have reduced the cost of debt which has finally become negative which is
counter intuitive.

3. The optimal capital structure is reached at a point where
WACC is minimum, in your calculation you have have selected WACC of 0.1854
which is not minimum as shown by your WACC calculation table

4. Requirement No.10 in the assignment states that, “Find
the average net income and assume that this net income will remain constant forever”.
You have not done the above, instead used five years data individually, which
is against the concept of constant growth.

5. You were supposed to find the optimal capital structure
where value of the firm is maximized. (ii) Find the value of debt at this level
(iii) should the company increase debt-level or reduce debt-level (iii) You
have not provided any answer to the above questions

__Tariq Khan and Muhammad Yunas__

1.
In the OGDC file, while calculating ke, you have
deducted Rf of .012 from Rm whereas Rf was 0.13

2.
While calculating kd, you were supposed to add
.05 to cost of debt with every increase of 10% in weight of debt instead you
have added .005

3.
In the WACC calculations, the column ‘assumed ke’
does not make sense, where you have multiplied 2 with kd. We have not studied
any such thing in the class, nor were there any such instructions in the
assignment

4.
Your suggestion for optimal capital structure
seems to be wrong in the OGDC file, you have written that debt should
be increased to 80%, whereas the calculations show that value of the firm and
share price are maximum at 6.14% debt.

__Hizbullah and Tahir Ali__

1.
In the NCL file, the beta of .98 was for the
current capital structure but in the calculations you have assumed it for 0
leverage

2. Requirement No.10 in the assignment states that,
“Find the average net income and assume that this net income will remain
constant forever”. You have not done the above, instead used five years data
individually, which is against the concept of constant growth.

3. You were
supposed to (ii) Find the value of equity and debt at optimal (iii) should the
company increase debt-level or reduce debt-level. You have not provided any
answer to the above questions.

4. The share price should have come from your calculations;
instead you have found it by dividing the existing balance sheet equity on
number of shares and have ignored your own calculations.

# Rukhshanda Naz

1.
Well done! There is one mistake, while
calculating kd, you were supposed to add .05 to cost of debt with every
increase of 10% in weight of debt instead you have added .005

# Asad Iqbal

1.
You have average the monthly Rm but have not
multiplied it with 12 to convert it to annual Rm

2.
In the PPL file, the beta of .86 was for the
current capital structure but in the calculations you have assumed it for 0
leverage, i.e. you have considered it as unlevered beta

3.
while calculating kd, you were supposed to add
.05 to cost of debt with every increase of 10% in weight of debt instead you
have added .1

4.
To answer point 10, you have written that, “*The current structure is a combination of
40% debt and 60% equity, Whereas to achieve optimal it should decrease the debt
level to 20%, And the shares should be priced at Rs.214.56.*” whereas the
share price is maximum at 0 debt i.e. it is 240

#

__Afzal and Furqan__

1. Your calculation for
the unlevered beta in LUCK sheet, first page, is incorrect, which is why your unlevered beta is higher than the levered
beta!!!!

2.

__Abeera and Ayesha__

1. You were
supposed to (ii) Find the value of equity and debt at optimal (iii) should the
company increase debt-level or reduce debt-level. (iii) find price per share. You have not provided any
answer to the above questions.

__Monesa__

1.
You have not shown calculations for
the unlevered beta, and counter intuitively it is higher than the levered
beta!!!!

2.
The risk free rate in your
calculation has incorrectly been divided on 100 for the year 2009 and onward.
It was already in decimal points, so you did not need to divided it further

__Adnan Shah and Adeel Ahmad__

1.
The average cost of debt in the ATRL firm is 1.92, which means the firms pays
192% interest. Such a big figure is logically incorrect, and hence calls for
additional checking of data. Generally, if your calculations return unreasonable
values, then you should review your calculations or use some other method.
Whatever model or method we use, they cannot defy logic.

2. In the ATRL file, the beta of .35 was
for the current capital structure but in the calculations you have assumed it
for 0 leverage, i.e. you have considered it as unlevered beta which is
incorrect.

2.
The cost of debt was supposed to increase by 5 percentage point with each
increase of 10% in weight of debt, in your calculations, you have added 10
percentage points instead.

3.
You were supposed to find the optimal capital structure where value of the firm
is maximized. (ii) Find the value of debt at this level (iii) should the
company increase debt-level or reduce debt-level (iii) Finding the share price
at this level. You have not provided any answer to the above questions

__Zeenat Shah and Ziaul Islam__

1.
You have deducted .02 from kd above
the yellow line in NCL file, and added .05 to kd below the yellow line, I
cannot see any reason for this inconsistency.

**2. **You have used monthly data but have deducted the yearly Rf
of .13 to find Ri-Rf or Rm-Rf. In your case, the Rf should have been adjusted
as =0.13/12

**3. **The yearly Rm was equal to =**0.00385x12= 0.0462, **but in the Ke calculation you have used the value of
0.00227 for Rm-Rf which is incorrect

4.
In finding the share price, you have
divided value/shares. Whereas you need to deduct the value of debt from the
total value of firm, then divided value of equity on shares.

__Qazi Ammad and Ihsanullah__

1.
In the FEROZ file, beta of 0.26 was for the current capital structure but in
the calculations you have assumed the beta of 0.1973 for current capital
structure

2.
The cost of debt was supposed to increase by 5 percentage point with each
increase of 10% in weight of debt, in your calculations, you have added 10
percentage points instead.

3.
You were supposed to find the optimal capital structure where value of the firm
is maximized. (ii) Find the value of debt at this level (iii) should the
company increase debt-level or reduce debt-level (iii) Finding the share price
at this level.You have not provided any answer to the above questions

__Aftab Ahmad and Ahmad Usman__

1.
For finding cost of debt, you have
divided interest on non-interest bearing liabilities. Instead, it should be
calculated as =interest/ interest bearing liabilities.

2.
In the WACC calculation, you have
shown kd to be negative in many cases. Such
a figure is logically incorrect, and hence calls for additional checking of
data. Generally, if your calculations return unreasonable values, then you
should review your calculations or use some other method. Whatever model or
method we use, they cannot defy logic.

# Sarwat and Tania

1.
Requirement No.10 in the assignment states that,
“Find the average net income and assume that this net income will remain
constant forever”. You have not done the above, instead used five years data
individually, which is against the concept of constant growth.

2.
You were supposed to find the optimal capital
structure where value of the firm is maximized. (ii) Find the value of debt at
this level (iii) should the company increase debt-level or reduce debt-level. You have not provided any answer to the above
questions

3.
You have not identified at what point optimal
capital structure is reached.