Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Apple, Starbucks or Nike! Estimate WACC for your selected firm (year 2018) Target: Collect and process raw data in stock market and estimate firm's cost
Apple, Starbucks or Nike!
Estimate WACC for your selected firm (year 2018) Target: Collect and process raw data in stock market and estimate firm's cost of equity, cost of debt, and weighted cost of capital using the model we learned. Required components for the report: Part 1: Select a listed firm from stock market and introduce the firm's related information. Part 2: Introduce your data (source, frequency etc.) Part 3: Estimate firm's cost of equity (annual rate) using CAPM model.-r,+Br.-) First, collect historical stock returns of the firm (e.g. previous 5 years daily return) and run regression of the firm's return on the market return (market index), the coefficient is the estimated Beta of the firm. Second, choose the proper risk free rate (R) and estimate cost of equity for the firm (r.). Part 4: Estimate firm's cost of debt (annual rate). Part 5: Decide the weight of equity and weight of debt by looking at the source of firm's financing. Part 6: Choose the corporate tax rate and now you are ready to compute firm's WACC. Part 7: Conclusions Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started