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For Assignment $3,$ you will estimate the weighted average cost of capital of a publicly traded company: Telus. Although you must use the most recent stock

market data, you should use the $2021$ Annual Report for the financial statement information. You are required to follow the instructions outlined below and

produce a written report that begins with an executive summary of your findings, which should be no more than one page long. The report should stand on its

own, so you must include an Excel spreadsheet where all the calculations are available rather than just the answers, but only as a reference tool for the text

submitted in a pdf document. So you should have $1$ pdf file plus $1$ Excel file for your submission.

Within your executive summary, discuss the reasonability of your estimate.

Carefully watch the video tutorials from Modules $5$ and $6$ before completing this assignment. Do not forget to properly reference all your sources and clearly

justify any assumptions.

Instructions

To estimate the cost of capital, you will need to estimate the cost of equity for Telus using the capital asset pricing model. Because data on preferred shares

can be difficult to find, you can ignore them for the purposes of this assignment. You need to estimate beta yourself, not just look it up$.$ You must use the most

recent market data available. Show the calculations in your Excel file.

To estimate the risk$-$free rate, go to the Bank of Canada website and use an average of the current $10-$year bond rates. Use $6\%$ as a risk premium, and use

the current Telus market capitalization. You will need to use the $2021$ Telus financial statements to calculate the pre$-$tax cost of debt, the tax rate, the after$-$tax

cost of debt, and the value of debt.

See the criteria below for mark distribution:

Professional presentation of your report including referencing $(10$ marks$)$

Correct use of CAPM to estimate the cost of equity $(30$ marks$)$

Correct calculation of the cost of debt $(40$ marks$)$

Correct calculation of the weighted average cost of capital $(10$ marks$)$

Discussion of the reasonability of your estimate $(10$ marks$)$

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