Question
Calculate the Weighted Average Cost of Capital (WACC) for McCormick and Company using the formula WACC = WD RD (1-T) + WS rS and WD
Calculate the Weighted Average Cost of Capital (WACC) for McCormick and Company using the formula WACC = WD RD (1-T) + WS rS and WD = Value of debt / Value of debt plus value of equity; WS = Value of Stock Equity / Value of Debt Plus Value of Equity. For ease, the CFO says to use book value of Debt and the market Value of Equity. On February 26, 2019 the market Value of Equity (or Market Cap) in Yahoo was $17.5 billion. Use the 2018 10-K Financial Statements filed January 25, 2019 and look on the Balance sheet to see the total of Short term borrowings, Current portion of long term debt and Long term debt. Use 4% for the cost of debt. Use 27.5% as the tax rate - a combination of federal and state income tax. From the 2018 10-K Financial statement, the rest of the info is as follows: short term borrowings/debt is $560.00, current portion of long term debt is $643.5 and the long term debt is $4,052.9. Use 2018 10K data to calculate the same for return on equity. Please help.
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