You want to calculate the WACC for auto parts retailer AutoZone (AZO). Complete the following steps to
Question:
You want to calculate the WACC for auto parts retailer AutoZone (AZO). Complete the following steps to construct a spreadsheet that can be updated.
a. Using an input for the ticker symbol, create hyperlinks to the web pages that you will need to find all of the information necessary to calculate the cost of equity. Use a market risk premium of 7 percent when using CAPM.
b. Create hyperlinks to go to the FINRA bond quote website and the SEC EDGAR database and find the information for the company’s bonds. Create a table that calculates the cost of debt for the company. Assume the tax rate is 21 percent.
c. Finally, calculate the market value weights for debt and equity. What is the WACC for AutoZone?
Cost Of DebtThe cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking...
Step by Step Answer:
a For the cost of equity use the Capital Asset Pricing Model CAPM Cost of Equity Risk Free Rate Mark...View the full answer
Fundamentals of Corporate Finance
ISBN: 978-1260153590
12th edition
Authors: Stephen M. Ross, Randolph W Westerfield, Robert R. Dockson, Bradford D Jordan
