E=31400m AED D=22516m AED In order to calculate the cost of capital of NBAD we must first calculate the cost of equity. Cost of equity can be calculated using capital asset pricing model (CAPM). The formula of return on equity according to CAPM is: Where Rf is risk free rate of return, Rm is market return and is beta equity (levered beta) of firm. Rm-Rf is called risk premium. Risk free rate is 2% in UAE and risk premium is 6.75%.Using these rates and levered beta (.510) we calculated the return on equity 5.44%. (Newyork University,n.d;UAE Deposits,n.d) Now using all the required data we have calculated WACC 4.97%.
E=31400m AED D=22516m AED In order to calculate the cost of capital of NBAD we must first calculate the cost of equity. Cost of equity can be calculated using capital asset pricing model (CAPM). The formula of return on equity according to CAPM is: Where Rf is risk free rate of return, Rm is market return and is beta equity (levered beta) of firm. Rm-Rf is called risk premium. Risk free rate is 2% in UAE and risk premium is 6.75%.Using these rates and levered beta (.510) we calculated the return on equity 5.44%. (Newyork University,n.d;UAE Deposits,n.d) Now using all the required data we have calculated WACC 4.97%.
my-corporate-finance-project.docx