some information the risk free rate is 1.902 Market Cap (the market value of equity) 254.89 Billion; Enterprise...

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Finance

some information
the risk free rate is 1.902
Market Cap (the market value of equity) 254.89 Billion;Enterprise Value (market-value equity + net debt) 319.73 Billion;Total Cash 10.11 billion ; Total Cash Per Share 5.62 ; Total Debt56.96 billion; Beta 0.7
pre tex cost of debt 3.522%
questions:
Compute the weights for equity and debt based on the marketvalue of equity and market value of debt
Calculate the company's cost of equity capital using the CAPM,the risk-free rate you collected, and a market risk premium of5%.
Assume that the company has a tax rate of 35%, calculate theeffective (after-tax) cost of debt capital.
Calculate the company's WACC using the market value of equityand debt.
Calculate the company's net debt by subtracting its cash fromits debt. Recalculate the weights for the WACC using the marketvalue of equity, net debt, and enterprise value (note: enterprisevalue is the total market value of a firm's equity and debt, lessthe value of its cash and marketable securities). Recalculate thecompany's WACC using the weights based on the net debt. How muchdoes it change?
How confident are you of your estimates in steps 4 and 5?Whichimplicit assumptions did you make during your data collectionefforts?

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4.2 Ratings (758 Votes)

Source weight Weight individual valuetotal value of firm market value of equity 25489 7728 market value of debt total value of firm market value of equity 7495 2272 total value of firm total enterprise value See Answer

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