Forum Archive Index - November 1999

[skumar@royalsunalliance.co.nz]

Mark,
I haven't got a copy of RBd's annual accounts and neither do I know their
internal cost of capital(C.O.C).  Generally c.o.c in NZ is higher than most OECD
countries with obvious reasons you highlighted in your  previous mail. A good
approach would be to use the weighted average(WACC) and attach a premium over
and above to discount your concerns and be conservative . This is safer as
chances of going wrong would be remote. Should there be deviations they will not
be much(but who knows the formula itself may come under scrutiny). Judging from
their past performances I would attach a range of 15-25%.

This is quite wide as I haven't done any  detailed analysis at this stage.  It
is rather a technical area and very subjective on most occassions. I haven't
been of much help ths time but once I have done a bit of analysis I'll post my
estimates.

Cheers
Suren



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