Imaam Spinning Mills: Cost of Capital of a Private Company

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Case

Reference no. W34046

Subject category: Finance, Accounting and Control

Authors: Aaqib Nawaz (Edinburgh Business School, Heriot-Watt University); Imran Yousaf (College of Business and Public Management, Wenzhou-Kean University); Zhichuan (Frank) Li (Ivey Business School, Western University)

Published by: Ivey Publishing

Originally published in: 2023

Version: 2023-11-10

Length: 7 pages

Data source: Generalised experience

Topics: Weighted average cost of capital; WACC; Cost of equity; Levered beta; Private company; Accounting; Finance

Share a link: https://casecent.re/p/194301

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Abstract

On January 2, 2018, the chief executive officer of a private company in Karachi, Pakistan, Imaam Spinning Mills (Imaam), was planning to expand the company's product line and enter the weaving business by setting up a new weaving plant. He asked his chief financial officer to conduct a financial evaluation financial evaluation of the project. To do so, she needed to calculate the weighted average cost of capital, using the comparative method to calculate the cost of capital for the unlisted firm based on financial data from Imaam and comparable firms, and determine the feasibility of the project.

Location:

Pakistan

Industry:

Manufacturing

Size:

Small

Other setting(s):

2023