1. What was the WACC for Heinz in the fiscal year 2010? (Assumption: marginal tax rate 30%)

(a) Find weight of debt and weight of equity using market value of equity and book value of debt.

(b) Find cost of debt and cost of equity.

		2010
Weight of Debt and Weight of Equity
Shares outstanding (in millions)
Share price (dollars as of close April 30, 2010)
Market value equity
Short term
Long term (including current portion)
Book value of debt (in millions of dollars)
Weight of equity
Weight of debt
Cost of Debt
Yield on long-term debt (from bond terms)
Tax rate
Cost of Equity
Beta
MRP
Rf
Cost of equity
WACC

 

1. What is your best estimate of the WACC for Kraft Foods, Campbell Soup Company, and Del Monte Foods in the fiscal year 2010? How do these WACCs influence your thinking about the WACC for Heinz? (Assumption: marginal tax rate 30%)

 

		Campbell	Del
	Kraft	Soup	Monte
Weight of Debt and Weight of Equity
Shares outstanding (in millions)
Share price (dollars as of close April 30, 2010)
Market value equity
Book value of debt (in millions of dollars)
Weight of equity
Weight of debt
Cost of Debt
Representative yield on long-term debt
Tax rate
Cost of Equity
Beta
MRP
Rf
Cost of equity
WACC

Answer rating: 100% (QA)

SOLUTION a Find weight of debt and weight of equity using market value of equity and book value of d... View the full answer