Use figures from the annual report to calculate the company’s cost of equity. • You will have to either calculate or source for the beta of the company. You can try www.morningstar.com.au or www.reuters.com. If you are using the beta from an online source, you have to investigate the time period of their calculations.
• You can use the 10 year Australian government bond for the risk-free rate.
• Your Rm must be the same as the previous section.
Include a table to show clearly the time frames of the variables used to calculate CAPM.
Variable
As at Period of
Rf
Rm
?
2- DGM calculations
All information needed to calculate Rd using the DGM can be found in the annual report.
Use the following formulas:
Do not include any special dividends as it is a once-off occurrence. Do not include franking credits include the page number of the annual report where you have obtained the figures
Always use numbers from the main Income Statement and Statement of Financial Position.
Use statutory not underlying and do not use adjusted figures.
If your company has many divisions/operations, you have to use the numbers of the main group.
You may use the calculated EPS from the annual report, but check if they have used adjusted figures and note in your report what they have adjusted for.
Make sure your D1 is the final and interim payout; without special dividends. Use the pay date, not ex-dividend date for dividends. Make a note in your report that as the payments are 6 months apart, the numbers do not fit the DGM formula well.
P0 is the start of the reporting year or end price of the previous year; this would be in the annual report.