Question: Walmart is considering changing the current capital structure to 40% debt and 60% equity, how would this impact the company's cost of capital? Would you

Walmart is considering changing the current capital structure to 40% debt and 60% equity, how would this impact the company's cost of capital? Would you recommend this change? Why or why not?

Beta = 0.53

Risk Free Rate = 1.95%

Average Market Rate of Return = 8%

Equity Risk Premium = 6.05%

Market Value of Debt = $48, 644, 000, 000

Cost of Debt = 4.06%

Weight of Debt = 10.91

Market Value of Equity = $397, 054, 230, 220

Weight of Equity = 89.09%

Cost of Equity = 5.16%

Market Value of Company = $445, 698, 230, 220

Effective Tax Rate = 24.48%

WACC = 4.93%

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