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Boeing has a WACC of 11.8%. Analyse the result and what this mean for the company using the data provided below Cost of Capital: Weighted
Boeing has a WACC of 11.8%. Analyse the result and what this mean for the company using the data provided below
| Cost of Capital: Weighted average Cost of Capita (WACC) | ||
| Cost of Debt calculation | ||
| Interest expense | 2533 | |
| Value of Debt | 57823.5 | |
| Cost of Debt- Rd | Interest expense/Value of Debt | 4.38% |
| Cost of Equity Calculation | ||
| Risk free rate- Rf | 3.780% | |
| Beta B extracted from Yahoo Finance | 1.43 | |
| Market return- Rm | 12% | |
| Cost of Equity- Rs | Rs=Rf+ [B*(Rm-Rf)] | 15.53% |
| Weight of Debt and Equity calculation | ||
| Value of Debts (D) | 57823.5 | |
| Value of Equity(E) | 113834.91 | |
| Value of Debt and Equity (D+E) | 1,71,658 | |
| Weighted Debt- Wd | D/V | 34% |
| Weighted Equity- We | E/V | 66% |
| WACC Calculation | ||
| Effective Tax rate- T extracted from Annual Report 2022 | -0.6% | |
| WACC | Wd Rd (1T )+ (We Rs ) | 11.8% |
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