Hello the firm is Lowe's I am having a difficult time with the following questions. The questions
Question:
Hello the firm is Lowe's I am having a difficult time with the following questions. The questions are to be answered with 2019-2020 Lowe's numbers the competition being Home Depot.
Any help is appreciated!
How is the firm financed? What percentage of the assets are financed by: equity; debt; and if applicable, preferred stock.
The more difficult component - what is the firm's average cost of capital? How much are they paying to use debt and how much for equity (what is the investor's required rate of return)?
When you know the cost of each component (and for debt, that's both before and after-tax, because you need to know the before tax number to calculate the after-tax cost), use them to calculate the WACC for the firm.
What are the implications for this WACC compared to their main competitor?