Please use this website to answer the question. The latest balance sheet is issued as of December 6, 2018

https://www.nasdaq.com/symbol/mmm/financials?query=balance-sheet

TAKING A CLOSER LoOK Use online resources to work on this chapter's questions. Please note that website information changes over time, and these changes may limit your ability to answer some of these questions. CALCULATING 3M's COST OF CAPITAL In this chapter, we described how to estimate a company's WACC, which is the weighted average of its costs of debt, preferred stock, and common equity. Most of the data we need to do this can be found from various data sources on the Internet. Here we walk through the steps used to calculate Minnesota Mining & Manufacturing's (MMM) WACC. Discussion Questions 1. As a first step, we need to estimate what percentage of MMM's capital comes from debt, preferred stock, and common equity. This information can be found on the firm's latest annual balance sheet. (As of year end 2013, MMM had no preferred stock.) Total debt includes all interest-bearing debt and is the sum of short-term debt and long-term debt. Recall that the weights used in the WACC are based on the company's target capital structure. If we assume that the company wants to maintain the same mix of capital that it currently has on its balance sheet, what weights a. should you use to estimate the WACC for MMM? b. Find MMM's market capitalization, which is the market value of its common equity. Using the sum of its short term debt and long-term debt from the balance sheet (we assume that the market value of its debt equals its book value) and its market capitalization, recalculate the firm's debt and common equity weights to be used in the equation. These weights are approximations of market-value weights. Be sure not to include accruals in WACC the debt calculation. Once again we can use the CAPM to estimate MMM's cost of equity. From the Internet, you can find a number of different sources for estimates of beta-select the measure that you think is best, and combine this with your estimates of the risk-free rate and the market risk premium to obtain an estimate of its cost of equity. (See the Taking a Closer Look problem in Chapter 8 for more details.) What is your estimate for MMM's cost of equity? Why might it not make 2. much sense to use the DCF approach to estimate MMM's cost of equity