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INFOSYS: TEACHING NOTE The Infosys case provides students with a view of company valuation in an emerging market context. Specifically, the case allows for the following: Estimating discount rates in emerging market countries Estimating discount rates for companies operating in emerging markets Establishing and assessing the risks of emerging markets vs. developed markets Introducing India as a potential emerging market investment opportunity Calculating Value at Risk (VaR) for an investment We set forth two possible teaching scenarios: one-day and two-day. The one day scenario compresses the discussion of risks in emerging markets vs. developed markets, assuming that some of these issues will have been introduced in general in earlier classes. The one-day scenario also eliminates the VaR analysis. Alternatively, the instructor could choose to focus a one-day discussion only on the VaR; however, we do not specifically describe that situation here. Lesson Plans Assumption: Class period is 2 hours long. One-Day Two-Day Introduction: Discussion of emerging market risk vs. developed market risk. Economic Socio-political List of possible measurements Time: 30 minutes Introduction: Discussion of emerging market risk vs. developed market risk. Economic Socio-political List of possible measurements - Time: 30 minutes Discussion of alternative discount rate models Failure of CAPM Introduce Goldman integrated model ICCRC model Time: 30 minutes Discussion of alternative discount rate models Failure of CAPM Introduce Goldman integrated model ICCRC model Introduce Ibbotsons data and approach - Time: 45 minutes India: Hurdle rate computation Risks ICCRC inputs/output Time: 25 minutes India: Hurdle rate computation (1st 2nd day break) Risks ICCRC inputs/output Time: 25 minutes Infosys: Hurdle rate valuation Sector risks Company specific issues (cash flow sources) Time: 20 minutes Infosys: Hurdle rate valuation Sector risks Company