(rD, rE, and WACC) Assume that E r( ) M = 8% and rf

= 4%. Use the data below to calculate the following Amgen’s variables as of year-end 2014.

a. Calculate Amgen’s cost of debt (rd ).

b. Calculate Amgen’s cost of equity (re ).

c. What is Amgen’s WACC?

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1 2 E(M) 3 4 Tax rate 5 Beta A B Calculating Amgen's WACC 8.00% 2.00% 7.65% 0.60 6 Outstanding shares 7 Market value of stock 8 Market value of equity 9 Book value per share 760,000,000 157.89 119,996,400,000 $34.88 10 Total book value of equity 26,508,800,000 11 Amgen's debt 43,231,000,000 12 Debt to equity ratio (book) 1.63 13 Amgen's total value 163,227,400,000 14 15 Interest paid, 2014 1,071,000,000 16 Debt, end-2014 43,231,000,000 17 Debt, end-2013 44,029,000,000