Question: A generic WACC formula is shown below. There are multiple inputs to this formula. Assume you plan to use the WACC to discount an infinite
A generic WACC formula is shown below. There are multiple inputs to this formula. Assume you plan to use the WACC to discount an infinite series of cash flows. Which of the following answers describes a plausible way to solve for the cost of equity? Select all that apply.
WACC
Use a CAPM with a longterm riskfree rate, a market risk premium around and Walmart's equity beta.
Use a CAPM with a longterm riskfree rate, a market risk premium between and Walmart's asset beta.
Use a CAPM with a longterm riskfree rate, a market risk premium between and Walmart's equity beta.
Use the cost of equity at a competitor store like Target as your estimate of Walmart's cost of equity.
Use a constant growth model. Using a plausible perpetual growth rate and the current dividend D you can solve for the next period's dividend payment Then using the current share price, g and D you can solve for the implied cost of equity.
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