Question: Using the Case Study Notes and the accompanying spreadsheet, calculate the WACC of each Microsoft segment comparable. Describe the primary WACC drivers that explain the

Using the Case Study Notes and the accompanying spreadsheet, calculate the WACC of each Microsoft segment comparable. Describe the primary WACC drivers that explain the differences between the WACC of Microsoft and its comparables.Can someone solve this ?

Using the Case Study Notes and the accompanying spreadsheet, calculate the WACC

Weighted Average Cost of Capital Case Calculations Capital Structure Components WACC Cost of Capital Components Expected Return of Risk Free Market Rate Tax Rate Pre-Tax Debt Cost Bond Rating Short-Term Long-Term Debt Debt Total Capital Beta Equity Target Microsoft Q1 Q2 8.072 1,08 1,07 9,95% 10,71% 3,06% 2,68% 51,39% 15,99% Moody's AAA AAA 2,525% 2,525% 878.361,6 780.362,3 79.856 80.301 966.289,6 865.845,3 9,66% 10,37% 5.182 Peers IBM 1,02 1,05 Q1 02 Q1 Q2 9,64% 9,35% 9,93% 10.18% 2.41% 2,01% 2,86% 2,99% 28,52% 27,67% 60,00% 60,00% 2.992% 2,653% 3,600% 3,600% A1 A1 A3 125.105.3 122.162,2 185.138,4 177.096,3 11.563 15.913 3.743 6.477 37.142 56.126 54.386 51.561 173.810,3 194.201,2 243.267,4 235.134,3 7,64% 6,82% 9,14% 8,73% Oracle 1,23 1,13 Weighted Average Cost of Capital Case Calculations Capital Structure Components WACC Cost of Capital Components Expected Return of Risk Free Market Rate Tax Rate Pre-Tax Debt Cost Bond Rating Short-Term Long-Term Debt Debt Total Capital Beta Equity Target Microsoft Q1 Q2 8.072 1,08 1,07 9,95% 10,71% 3,06% 2,68% 51,39% 15,99% Moody's AAA AAA 2,525% 2,525% 878.361,6 780.362,3 79.856 80.301 966.289,6 865.845,3 9,66% 10,37% 5.182 Peers IBM 1,02 1,05 Q1 02 Q1 Q2 9,64% 9,35% 9,93% 10.18% 2.41% 2,01% 2,86% 2,99% 28,52% 27,67% 60,00% 60,00% 2.992% 2,653% 3,600% 3,600% A1 A1 A3 125.105.3 122.162,2 185.138,4 177.096,3 11.563 15.913 3.743 6.477 37.142 56.126 54.386 51.561 173.810,3 194.201,2 243.267,4 235.134,3 7,64% 6,82% 9,14% 8,73% Oracle 1,23 1,13

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!