Question: please make excel spreadsheet to show work Estimate the most current Cost of Equity and Total Market Value of Equity of Walmart Inc (ticker: WMT).
Estimate the most current Cost of Equity and Total Market Value of Equity of Walmart Inc (ticker: WMT). Use CAPM to estimate the cost of equity. Assume that the market risk premium is 5% and that the marginal tax rate is 21%. Suggested sources of the data: 1. SEC's Edgar database - for financial statements and annual or quarterly report (10-K or 10-Q) 2. Stock returns from CRSP database - to calculate the beta (an Excel file with the data is available on CANVAS. Column G is the date of the end of the observation month, I is monthly returns on Fiserv's stock, L is CRSP value-weighted index, N is S\&P 500 index returns). 3. U.S. Treasury's web-site - for T-bond rates 4. Yahoo's finance web-site or NASDAQ.com - for the stock price around the date of the most recent financial report. Recipe: a) Calculate the market value of equity using number of shares outstanding from the most recent financial report and historical stock price as of that date from NASDAQ or Yahoo. b) Calculate the cost of equity using CAPM. For that, you are provided the market risk premium. Use current yield on the 10-year Treasury bond as the risk-free rate, and calculate the beta of Walmart stock using 5 years of monthly stock returns and VW CRSP portfolio as the market portfolio. Data on stock returns are provided in the Excel file using CRSP database. Estimate the most current Cost of Equity and Total Market Value of Equity of Walmart Inc (ticker: WMT). Use CAPM to estimate the cost of equity. Assume that the market risk premium is 5% and that the marginal tax rate is 21%. Suggested sources of the data: 1. SEC's Edgar database - for financial statements and annual or quarterly report (10-K or 10-Q) 2. Stock returns from CRSP database - to calculate the beta (an Excel file with the data is available on CANVAS. Column G is the date of the end of the observation month, I is monthly returns on Fiserv's stock, L is CRSP value-weighted index, N is S\&P 500 index returns). 3. U.S. Treasury's web-site - for T-bond rates 4. Yahoo's finance web-site or NASDAQ.com - for the stock price around the date of the most recent financial report. Recipe: a) Calculate the market value of equity using number of shares outstanding from the most recent financial report and historical stock price as of that date from NASDAQ or Yahoo. b) Calculate the cost of equity using CAPM. For that, you are provided the market risk premium. Use current yield on the 10-year Treasury bond as the risk-free rate, and calculate the beta of Walmart stock using 5 years of monthly stock returns and VW CRSP portfolio as the market portfolio. Data on stock returns are provided in the Excel file using CRSP database
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