Instructions: Either individually or in groups of up to 4 people (please include the names of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Instructions: Either individually or in groups of up to 4 people (please include the names of all group members on the submission) complete the following: Recall that the weighted average cost of capital (WACC) with taxes formula is as follows: • is the market value of equity (market capitalization). • is the market value of debt. • is the cost of debt. • is the cost of equity • is the fraction of debt in the firm's total liabilities (aka the leverage ratio) • is the fraction of equity in the firm's total liabilities (1- levergae ratio) is the effective tax rate the company pays For this assignment, you will find the WACC of any firm you choose, but you may want to use the firm you chose for the Ratio Analysis assignment because you already have some of the necessary data. Follow the steps below, showing all your work or showing screenshots of where you got your information. 1. Find "E", the market value of equity. Remember that market cap = price per share x number of shares outstanding. 2. "D" is the market value of debt. This is difficult to find without using non-public data. For the sake of this assignment, it is OK to use the book value of debt, but if you want to challenge yourself, you can try to use the Bloomberg terminals in the trading room to find the market value of debt. 3. should be the current yield to maturity (YTM) on the company's debt. This is also difficult to find using public data. You can either try to use the Bloomberg terminals for this, or you will need to go to the latest 10-K and find the interest rate or effective interest rate of its last bond offering listed in a subsection on Debt. Searching the 10-K using Ctrl+F and words like "debt" and "interest rate" can help you save some time. Instructions: Either individually or in groups of up to 4 people (please include the names of all group members on the submission) complete the following: Recall that the weighted average cost of capital (WACC) with taxes formula is as follows: • is the market value of equity (market capitalization). • is the market value of debt. • is the cost of debt. • is the cost of equity • is the fraction of debt in the firm's total liabilities (aka the leverage ratio) • is the fraction of equity in the firm's total liabilities (1- levergae ratio) is the effective tax rate the company pays For this assignment, you will find the WACC of any firm you choose, but you may want to use the firm you chose for the Ratio Analysis assignment because you already have some of the necessary data. Follow the steps below, showing all your work or showing screenshots of where you got your information. 1. Find "E", the market value of equity. Remember that market cap = price per share x number of shares outstanding. 2. "D" is the market value of debt. This is difficult to find without using non-public data. For the sake of this assignment, it is OK to use the book value of debt, but if you want to challenge yourself, you can try to use the Bloomberg terminals in the trading room to find the market value of debt. 3. should be the current yield to maturity (YTM) on the company's debt. This is also difficult to find using public data. You can either try to use the Bloomberg terminals for this, or you will need to go to the latest 10-K and find the interest rate or effective interest rate of its last bond offering listed in a subsection on Debt. Searching the 10-K using Ctrl+F and words like "debt" and "interest rate" can help you save some time.
Expert Answer:
Answer rating: 100% (QA)
1 Find E the market value of equity Remember that market cap price per share x number of shares outstanding Answer The market value of equity E is cal... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
Students also viewed these finance questions
-
Mr. Fox has just bought an old apartment for $1,000,000. Mr. Fox plans to rent out the apartment. The apartment in its current condition can be rented out for $3,500 at the end of each month forever....
-
Flanders Corporations 2014 income statement and comparative balance sheet as of June 30, 2014 and 2013 follow. The following is additional information about 2014: (a) equipment that cost $48,000 with...
-
Presented below is the unaudited balance sheet as of December 31, 2007, prepared by the bookkeeper of Zues Manufacturing Corporation. Your firm has been engaged to perform an audit, during which the...
-
Consider how the Claims in our Debate Cases are the Messages we as Senders Encode to the Opposition Team / Receivers. When writing and litigating / presenting your Debate Case consider ways to...
-
Assume that your firm wants to choose between two project options: Project A: $500,000 invested today will yield an expected income stream of $150,000 per year for 5 years, starting in Year 1. ...
-
What is the difference between a salary allowance for allocating profit among partners and salary expense? Between an interest allowance and interest expense?
-
An auditor is performing an attribute estimation sampling plan. Assuming a .05 acceptable risk of assessing control risk too low, a .04 tolerable rate of deviation, and a .01 expected population...
-
In a government report in 2012,1 it was estimated that Air Force One costs the taxpayers $ 179,750 per hour. Air Force One is a custom- built Boeing 747 for the presidents use while in office. (There...
-
Why does the government intervene in the economy? Explain two ways the government seeks to direct the economy in a mixed economic system like the United States. How can ordinary citizens influence...
-
Rowrite the following java program using it Else statement.(5 marks) import java.util Scanner, public class Main { public static void main(String[] args) { Scanner input = new Scanner(System.in),...
-
9. What is Paleomagnetism? Explain what information is preserved and how
-
Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31 of the prior year were inventory, $50,900; total...
-
In a random sample of 50 men, 27 own cats. Complete a full hypothesis testing the claim that the proportion of men that own cats is equal to 54%. Use a significance level of 5%. a.) Clearly state the...
-
1. "The Greenhouse effect is a natural phenomenon*. Briefly explain 2. Using the greenhouse effect, explain how the burning of fossil fuels contribute to global warming 3. Briefly outline TWO...
-
SSX Ltd has 5 million shares of common stock outstanding, 2 million shares of preferred stock outstanding, and 100,000 bonds (face value $1,000). The common shares are selling for $25 per share, the...
-
Write a new patient encounter report explaining the concepts below and how you would communicate to the client and perhaps her daughter. Address the following: Explain the importance of autonomy,...
-
On March 31, 2018, Gardner Corporation received authorization to issue $30,000 of 9 percent, 30-year bonds payable. The bonds pay interest on March 31 and September 30. The entire issue was dated...
-
The FASB is organized to establish generally accepted accounting principles. It is assisted by various groups and operates under a set of procedures. Required Prepare a short written report that...
-
Explain what causes an exchange gain or loss and when each occurs.
-
On January 2, 2007 the Bray Corporation issues 900 shares of $100 par convertible preferred stock for $117 per share. On January 7, 2008, all the preferred stockholders convert their shares to common...
-
Specialists may be required to perform audit tasks that require knowledge or skills outside the auditor's abilities. Examples from the text include an engineer (to verify the stage of completion of...
-
Client-acceptance decisions have become increasingly important. This is mainly due to the increased risk of litigation against audit firms in some countries as a result of being associated with...
-
For each scenario below, describe which of the five general conditions that undermine independence in appearance is most relevant. a. An auditor recommends its audit clients' services to other...
Study smarter with the SolutionInn App