Question 22 [35 marks] Nvidia Corporation (Nasdaq: NVDA) is a multinational technology company designing graphics processing units (GPUs) for the gaming and professional markets, as well as system on a chip units (SoCs) for the mobile computing and automotive market. The company's competitors include Advanced Micro Devices (AMD), Intel, and Qualcomm. Unless otherwise stated, references are to fiscal years (e.g., year 2021 means the fiscal year 2021 running from February 2020 to January 2021). An analyst has made the following forecasts of the company's earnings per share (EPS): Year: EPS: 2022 $4.34 2023 $5.63 2024 $6.65 2025 $7.90 The supplementary pdf and Excel documents contain extracts from markets.ft.com and from the company's 2021, 2020, and 2018 Annual Reports (Form 10-K). Refer to the information in the supplementary documents and below in answering this question. You must assume the following: The company's marginal tax rate may be approximated by its effective tax rate. The effective tax rate (ETR) in fiscal year 2021 is expected to continue in the future. The total number of common shares outstanding is expected to remain at the same level as reported in the financial statements of fiscal year-end 2021. The price of the company's common share is the closing price reported on the given date or, if unavailable, the closing price reported on the previous trading day. The risk-free rate is 1%. The equity risk premium is 8.17%. The company's cost of debt is 3.43%, as approximated by the median effective interest rate of its Notes as of fiscal year-end 2021. Note: Write all figures, except for per share data, in the unit of million. For example, Net income for fiscal year 2021 should be written as 4,332, i.e., as reported in the financial statements because it is reported in the unit of million (dollars). The number of shares data is also reported in the unit of million. Show major steps of computation and indicate the data inputs used; for repeated calculations, show at least one illustrative calculation. State any assumption necessary for carrying out your analysis and explain the basis of the assumption. Required: i. Rounding to three significant digits, estimate the weighted average cost of capital (WACC) of the company as at the fiscal year-end 2021, using the approach discussed in the module. [6 marks] Question 22 [35 marks] Nvidia Corporation (Nasdaq: NVDA) is a multinational technology company designing graphics processing units (GPUs) for the gaming and professional markets, as well as system on a chip units (SoCs) for the mobile computing and automotive market. The company's competitors include Advanced Micro Devices (AMD), Intel, and Qualcomm. Unless otherwise stated, references are to fiscal years (e.g., year 2021 means the fiscal year 2021 running from February 2020 to January 2021). An analyst has made the following forecasts of the company's earnings per share (EPS): Year: EPS: 2022 $4.34 2023 $5.63 2024 $6.65 2025 $7.90 The supplementary pdf and Excel documents contain extracts from markets.ft.com and from the company's 2021, 2020, and 2018 Annual Reports (Form 10-K). Refer to the information in the supplementary documents and below in answering this question. You must assume the following: The company's marginal tax rate may be approximated by its effective tax rate. The effective tax rate (ETR) in fiscal year 2021 is expected to continue in the future. The total number of common shares outstanding is expected to remain at the same level as reported in the financial statements of fiscal year-end 2021. The price of the company's common share is the closing price reported on the given date or, if unavailable, the closing price reported on the previous trading day. The risk-free rate is 1%. The equity risk premium is 8.17%. The company's cost of debt is 3.43%, as approximated by the median effective interest rate of its Notes as of fiscal year-end 2021. Note: Write all figures, except for per share data, in the unit of million. For example, Net income for fiscal year 2021 should be written as 4,332, i.e., as reported in the financial statements because it is reported in the unit of million (dollars). The number of shares data is also reported in the unit of million. Show major steps of computation and indicate the data inputs used; for repeated calculations, show at least one illustrative calculation. State any assumption necessary for carrying out your analysis and explain the basis of the assumption. Required: i. Rounding to three significant digits, estimate the weighted average cost of capital (WACC) of the company as at the fiscal year-end 2021, using the approach discussed in the module. [6 marks]