Question
What was the WACC for Heinz in the fiscal year 2010? (Assumption: marginal tax rate 30%) (a) Find weight of debt and weight of equity
- What was the WACC for Heinz in the fiscal year 2010? (Assumption: marginal tax rate 30%)
(a) Find weight of debt and weight of equity using market value of equity and book value of debt.
(b) Find cost of debt and cost of equity.
| 2010 | ||
| Weight of Debt and Weight of Equity | ||
| Shares outstanding (in millions) | ||
| Share price (dollars as of close April 30, 2010) | ||
| Market value equity |
| |
| Short term | ||
| Long term (including current portion) | ||
| Book value of debt (in millions of dollars) | ||
| Weight of equity | ||
| Weight of debt | ||
| Cost of Debt | ||
| Yield on long-term debt (from bond terms) | ||
| Tax rate | ||
| Cost of Equity | ||
| Beta | ||
| MRP | ||
| Rf | ||
| Cost of equity | ||
| WACC | ||
- What is your best estimate of the WACC for Kraft Foods, Campbell Soup Company, and Del Monte Foods in the fiscal year 2010? How do these WACCs influence your thinking about the WACC for Heinz? (Assumption: marginal tax rate 30%)
| Campbell | Del | ||
| Kraft | Soup | Monte | |
| Weight of Debt and Weight of Equity | |||
| Shares outstanding (in millions) | |||
| Share price (dollars as of close April 30, 2010) | |||
| Market value equity | |||
| Book value of debt (in millions of dollars) | |||
| Weight of equity | |||
| Weight of debt | |||
| Cost of Debt | |||
| Representative yield on long-term debt | |||
| Tax rate | |||
| Cost of Equity | |||
| Beta | |||
| MRP | |||
| Rf | |||
| Cost of equity | |||
| WACC |
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Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
8th Edition
1285190904, 978-1305176348, 1305176340, 978-1285190907
