1. Find out the Apple stock market credit rating. Explain what Apple stock credit rating is and the reasons for the high or low rating based on your research.
2. Also, use the Fidelity Fixed Income Web page to find out what the current return is for a 30-year bond for a corporation with the rating that Apple has. This yield will be the approximate cost of debt capital for Apple Inc. We will call the cost of debt RD.

2. Now estimate the cost of equity for the Apple stock Market. You will also need the three-month treasury bill yield, which we will use as our measure of the risk-free rate. This rate should be listed on the Fidelity Fixed Income Web page linked above. Finally, you will need the equity risk premium. You can find estimates of this on many Web pages including Fidelity Fixed Income or Gutenberg Research. It is usually around 5%. Once you have this information, you can estimate the cost of equity as the three-month treasury bill yield rate plus beta multiplied by the equity premium:

Cost of Equity = risk-free rate + Beta * (Equity Premium).

Show your calculations. We will call the cost of equity RE.

3. Now find out how much of the firm's capital is equity and how much is debt. For the total value, look at the balance sheet for your company as found on Google Finance or a similar Web page. The total value of your company will be “total liabilities and shareholder’s equity.” The proportion of debt will be total liabilities divided by total value, which we will call D/V. The proportion of equity will be shareholder’s equity divided by total value, or E/V. If you calculate them correctly, the proportions will add up to one.

4. Now we have all the information we need to get at least a rough ballpark estimate of WACC. Let’s assume a corporate tax rate of 35%. So the formula we will use is WACC = (E/V)* RE +(D/V)* RD *(1-.35)

Calculate WACC and show your computations. As a “reality check” on your calculations, the WACC should likely be in the single digits and positive. Compare what you found to the average WACC in your company’s industry, which should be available on Web pages such as Cost of Capital by Sector (US). Note that 35% is the official corporate tax rate, but many corporations find tax breaks. If your WACC is too low, try computing it with a lower tax rate such as 25% or 10%.

1. Find out the Credit Rating of Apple’s Stock Market. Explain what Apple’s Stock market credit rating is and the reasons for the high or low rating based on your research.

Also, use the Fidelity Fixed Income Web page to find out what the current return is for a 30-year bond for a corporation with the rating that Apple has. This yield will be the approximate cost of debt capital for your company. We will call the cost of debt RD.

2. Now estimate the cost of equity for Apple Stock market. You will also need the three-month treasury bill yield, which we will use as our measure of the risk-free rate. This rate should be listed on the Fidelity Fixed Income Web page linked above. Finally, you will need the equity risk premium. You can find estimates of this on many Web pages including Fidelity Fixed Income or Gutenberg Research. It is usually around 5%. Once you have this information, you can estimate the cost of equity as the three-month treasury bill yield rate plus beta multiplied by the equity premium:

Cost of Equity = risk-free rate + Beta * (Equity Premium).

Show your calculations. We will call the cost of equity RE.

3. Now find out how much of the Apple stock market capital is equity and how much is debt. For the total value, look at the balance sheet for Apple Inc. as found on Google Finance or a similar Web page. The total value of Apple inc. will be “total liabilities and shareholder’s equity.” The proportion of debt will be total liabilities divided by total value, which we will call D/V. The proportion of equity will be shareholder’s equity divided by total value, or E/V. If you calculate them correctly, the proportions will add up to one.

4. Now we have all the information we need to get at least a rough ballpark estimate of WACC. Let’s assume a corporate tax rate of 35%. So the formula we will use is WACC = (E/V)* RE +(D/V)* RD *(1-.35)

Calculate WACC and show your computations. As a “reality check” on your calculations, the WACC should likely be in the single digits and positive. Compare what you found to the average WACC in Apple industry, which should be available on Web pages such as Cost of Capital by Sector (US). Note that 35% is the official corporate tax rate, but many corporations find tax breaks. If Apple’s WACC is too low, try computing it with a lower tax rate such as 25% or 10%.

Answer rating: 100% (QA)

Apple Stock Market Credit Rating Apples stock market credit rating is AA the secondhighest rating possible This rating is assigned by SP Global Rating... View the full answer