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 Current Portion of LT Debt.
To calculate the cost of Short Term Debt you can use the yield to maturity on the 5.15% bond that matures in 12/15/2021. Likewise, you may use the 4.125% bond that matures in 10/09/2042 as a proxy for Long Term Debt.
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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Banking With Integrity The Winners Of The Financial Crisis
Authors: Dr Heiko Spitzeck , Dr Michael Pirson, Dierksme , Dr. Heiko Spitzeck , Prof. Claus Dierksmeier, Dr. Michael Pirson
1st Edition
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