The activities of Tesco are financed by both debt and equity. You are required to collect the
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Question:
The activities of Tesco are financed by both debt and equity.
You are required to collect the following information and calculate the weighted average cost of capital (WACC) of Tesco.
- Market Cap of Tesco. [5 marks]
- Long-term Debt of Tesco. (From the recent released balance sheet of company) [5 marks]
- Beta of Tesco as measure of systematic risk. [5 marks]
- 10-year Bond rate of UK government as proxy of risk-free rate. [5 marks]
- What is the weighted average cost of capital (WACC) of Tesco? (Hint: according to IG market, the average of recent yearly returns of FTSE100 as proxy of UK market is 7.5%; UK corporate tax rate is 19%). [10 marks]
Related Book For
Cost Management Measuring Monitoring and Motivating Performance
ISBN: 978-0470769423
2nd Canadian edition
Authors: Leslie G. Eldenburg, Susan Wolcott, Liang-Hsuan Chen, Gail Cook
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