1.) Using data from Exhibit 12.2 and Exhibit 12.3, estimate the total book value of debt (both short-term and long-term) and market value of equity as of April 2009 and 2010. In addition, compute the weight of debt and equity in both years. Are there much differences in these weightings?

2.) Using Exhibit 12.4 (this data is available in the student spreadsheet posted on Canvas), estimate the WACC for the comparable firms. In your estimation of the cost of equity, assume that the equity market risk premium equals 5.5%. In addition, assume that marginal corporate tax rate is 30%. 3.) Do you expect the WACC of Heinz to be very different from those of the comparable firms? Briefly explain why.

Exhibit 2 H. J. HEINZ: ESTIMATING THE COST OF CAPITAL IN UNCERTAIN TIMES Balance Sheet (numbers in thousands of dollars except per-share amounts; fiscal year ends in April) 2008 2009 2010 Cash 617,687 373,145 483,253 Net receivables 1,161,481 1,171,797 1,045,338 Inventories 1,378,216 1,237,613 1,249,127 Other current assets 168,182 162,466 273,407 Total current assets 3,325,566 2,945,021 3,051,125 Net fixed assets 2,104,713 1,978,302 2,091,796 Other noncurrent assets 5,134,764 4,740,861 4,932,790 Total assets 10,565,043 9,664,184 10,075,711 Accounts payable 1,247,479 1,113,307 1,129,514 Short-term debt 124,290 61,297 43,853 Current portion of long-term debt 328,418 4,341 15,167 Other current liabilities 969,873 883,901 986,825 Total current liabilities 2,670,060 2,062,846 2,175,359 Long-term debt 4,730,946 5,076,186 4,559,152 Other noncurrent liabilities 1,276,217 1,246,047 1,392,704 6,007,163 6,322,233 5,951,856 Equity 1,887,820 1,279,105 1,948,496 Total liabilities and equity 10,565,043 9,664,184 10,075,711 Shares outstanding (in millions) 311.45 314.86 317.69

Data source: H. J. Heinz SEC filings, 2008-10.

Exhibit 3 H. J. HEINZ: ESTIMATING THE COST OF CAPITAL IN UNCERTAIN TIMES Capital Market Data (yields and prices as of the last trading day in April of the year indicated) Average Historic Yields 2003 2004 2005 2006 2007 2008 2009 2010 1-year 1.22% 1.55% 3.33% 4.98% 4.89% 1.85% 0.49% 0.41% 5-year 2.85% 3.63% 3.90% 4.92% 4.51% 3.03% 2.02% 2.43% 10-year 3.89% 4.53% 4.21% 5.07% 4.63% 3.77% 3.16% 3.69% 30-year(1) 4.79% 5.31% 4.61% 5.17% 4.89% 4.49% 4.05% 4.53% Moody's Aaa 5.53% 5.87% 5.21% 5.95% 5.40% 5.51% 5.45% 5.13% Moody's Baa 6.65% 6.58% 5.97% 6.74% 6.31% 6.87% 8.24% 6.07% 3-month commercial paper 1.21% 1.08% 2.97% 4.90% 5.22% 1.91% 0.22% 0.24% Heinz Capital Market Prices of Typical Issues 2009 2010 Heinz stock price $34.42 $46.87 Bond price: 6.750% coupon, semiannual bond due 3/15/32 (Baa rated) 91.4 116.9 Bond price: 6.625% coupon, semiannual bond due 10/15/12 (Baa rated) 116.5 113.7 (1) The 20-year yield is used for 2003-05, when the 30-year was not issued. Note that bond data were slightly modified for teaching purposes.

Exhibit 4 H. J. HEINZ: ESTIMATING THE COST OF CAPITAL IN UNCERTAIN TIMES Comparable Firm Data Campbell Del Kraft Soup Monte Financial Summary Revenues (in millions of dollars) 40,386 7,589 3,739 Book value of equity (in millions of dollars) 25,972 728 1,827 Book value of debt (in millions of dollars) 18,990 2,624 1,290 Market Data Beta 0.65 0.55 0.70 Shares outstanding (in millions) 1,735 363 182 Share price (dollars as of close April 30, 2010) 29.90 35.64 15.11 Typical Standard & Poor's bond rating BBB A BB Representative yield on long-term debt 5.12% 4.36% 6.19%

Data sources: Value Line; H. J. Heinz SEC filings, 2008-10; case writer estimates; Morningstar.