Question
Calculate the WACC for General Electric Company (ticker symbol GE). For the market value of Short Term Debt, you may use the book value of
Calculate the WACC for General Electric Company (ticker symbol GE). For the market value of Short Term Debt, you may use the book value of ST Borrowings (from Bloomberg). For the market value of Long Term Debt, you may use the book value of LT Borrowings plus the Current Portion of LT Debt.
To calculate the cost of Short Term Debt you can use the yield to maturity on the 5.05% bond that matures on 05/15/2022. Likewise, you may use the 5.25% bond that matures on 04/15/2034 as a proxy for Long Term Debt. (Note: you will need to Page Down several pages in order to find this bond).
You may ignore the Preferred Equity. (It is a very small amount and there is no price data for it.)
Use 5.0% as the Market Risk Premium. Finally, calculate the WACC using both the Security Market Line Method, as well as the Dividend Discount Method to calculate the Cost of Equity.
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