My company is Target (TGT).

In this project, you will find and discern the appropriate data to determine a realistic assessment of the weighted average cost of capital for a firm of your choosing.

You will need to search for data from several sources, use subjective judgment to determine which data to use or discard, use subjective judgment to determine which calculation gives a more acceptable estimate and make some simplifying assumptions.

The purpose of the projects is to show some of the sources of measurement errors in financial analysis, to introduce the diverse sources of publicly available financial information and to develop skill in analysis in situations where there are too much or too little data.

Keep the following in mind when choosing a company:

• Publicly traded
• No utilities
• No financial firms
• No all equity firms
• No firms with large amounts of convertible securities or warrants

Organization of the paper should be as follows:

I.Title page

II.Table of Contents

III.Introduction/Background (2-3 pages)

This section should include background on the company that has been chosen.

IV.Pages showing equations with data and brief description

There is no page length given for this as it can vary greatly. This section is to be divided up based on the topics. In each section, you must show and explain the equations that are used. In addition, you are to draw any conclusions on the company you can from this data. Please note that detailed worksheets showing all of the calculations for this section are to be included in an appendix.

Cost of Equity (Common Stock)

oBetafrom Regression and two Betas from analysts

oBeta Chosen for CAPM and why

oCapital Assets Pricing Model (include how determined R_Fand[ R_Mor (R_M- R_F)]

oDiscounted Cash Flow (DCF) (only if dividends - include how determined)

oOwn-Bond-Yield-plus-Judgmental-Risk-Premium (include how determine risk premium)

Cost of Preferred Stock

Cost of Debt (make sure to include table that lists all bond issues with weighted average cost of debt)

Market Value of Debt (will have calculated above, but will need to add any longterm leases from balance sheet to get total market value of debt)

Market Value of Equity

Market Value of Preferred Stock

Value of Firm

Firm's Tax Rate (explain how determined)

Weight for Equity

Weight for Preferred Stock

Weight for Debt

WACC (Weighted Average Cost of Capital)

V.Assumptions

Including but not limited to R_F, R_M,RP_M(which =Rm - R_F),growth rate of dividends. This page should have a brief description of how you came up with the estimates with spreadsheets, etc. to be put in the appendix.

VI.Appendix

Appendix should include all relevant data including debt data from Morningstar, calculations of weighted average cost of debt, stock returns, betas from analysts, beta regression analysis, method/sourcing for R_Fand R_M,growth rates for dividends, different methods to determine tax rates, etc.Detailed descriptions, tables of data and excel sheets etc will be in the appendix.

VII.References

Solve with all the calculation and what formulas you used. In part IV. the o Beta from Regression and two Betas from analysts has to be done why hand. I also need to calculated not just WACC, but also weighted average. Provide details on how you got the number or where it came from.

Answer rating: 100% (QA)

Title Determination of Weighted Average Cost of Capital for Target Corporation TGT Table of Contents I IntroductionBackground II Equations and Data Analysis A Cost of Equity Common Stock 1 Beta from R... View the full answer