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Calculate Walmart's capital cost ( the WACC ) . Estimate three more parameters in the formula besides the cost of equity that you already have:
Calculate Walmart's capital cost the WACC
Estimate three more parameters in the formula besides the cost of equity that you already have: the cost of debt, the weight of debt, and
the weight of equity. To estimate the weights, first calculate the company's value as the addition of the book value of financial debt plus the market value of equity, also known as Market capitalization. The weight on debt is the book value of the financial debt over the company's value, and the equity value is just one minus the weight on debt. Assume that the cost of debt is the current riskfree rate plus percent Use a corporate tax rate of
percent.
After you estimate the cost of capital, share your results with us and comment on the following questions: Do you think your company's WACC will increase or decrease in the future? Explain your reasoning based on the components variables that determine the value of the WACC.
Most if not all of the information from Yahoo Finance or Reuters. Cost of Equity Estimated:
Company Value Estimated: $ billion $ billion
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