Assignment 4

The WACC for Target Due Sunday, April 25, 2021 at 11:59pm

Please submit on D2L/Dropbox

Following the videos posted online (Cost of equity AND Calculating WACC for a publicly traded firm), compute the WACC for Target (TGT).

Notes: For dividends, use the last 10 years. That is from 2011 to 2020. The first dividend in your analysis should be the dividend that was paid on Feb 14, 2011 and the last the one that was paid on Nov 17, 2020.

Use the geometric and arithmetic averages. This way you can see how sensitive your answer is to different assumptions.

You can find the BS and IS under Financials.

Use the last 2 years of financial data available (1/31/2020 and 1/31/2021).

In the video you have Current maturity of long-term debt. On Yahoo Finance you will find it as Current Debt and Capital Lease Obligations.

In the video you have Long-term debt. On Yahoo Finance you will find it as Long-term Debt and Capital Lease Obligations.

You can find the interest expense, income before tax (pretax income) and the tax expense (tax provision) in the IS.

Be careful, the income statement has TTM. Do not use that. Use your end of the year information.

COMPUTE THESE NUMBERS

1. Find the Dividends
2. Compute Annual Dividend
3. Compute Growth Rates (arithmetic and geometric)
4. Find Stock Price
5. Compute D1
6. Compute Required Rate (Cost of Equity)
7. Find Short Term Debt
8. Find Long Term Debt
9. Compute Total Debt
10. Find Earnings Before Taxes
11. Find Tax Expense
12. Compute Average Tax Rate
13. Compute Before Tax Cost of Debt
14. Compute After Tax Cost of Debt
15. Find Number of Shares
16. Compute Market Value of Equity
17. Compute Weights
18. Compute WACC