can you explain to me how they got 0.0267

example 1.pdf - Adobe Acrobat Reader DC X File Edit View Sign Window Help Home Tools example 1.pdf X (? Sign In 1 /1 O + 75% State Finished Question 3 Incorrect Mark 0.00 out of 2.00 Estimating the Weighted Average Cost of Capital Search 'Merge PDF' Kellogg Company manufactures cereal and other convenience food under its many well-known brands such as Kellogg's@, Keebler@, and Cheez-It@. The company, with over $13.5 billion in annual sales worldwide, partially finances its operation through the issuance of debt. At the beginning of its 2018 fiscal year, it had $8.25 billion in total debt. At the end of fiscal year 2018, its total debt had increased to $8.72 billion. Its fiscal 2018 interest expense was $287 million, and its assumed statutory tax rate was 21%. Kellogg Company has an estimated market beta of 0.85. Assume that the expected risk-free rate is 2.1% and the expected market premium is 5%. Export PDF V Kellogg's stock closed at $57.01 on December 31, 2018. On that same date, the company had 420,666,780 shares issued, of which 76,801,314 shares were in treasury. Edit PDF a. What is Kellogg's total market capitalization as of December 31, 2018? Enter answer in billions, rounding to one decimal place. Create PDF V $ 3 x billion b. Compute Kellogg's WACC. = Comment Use your rounded answer above for computation. Round answer to two decimal places (ex: 0.02345 = 2.35%). Combine Files 3 a. Total market capitalization = $57.01 x (420,666,780 - 76,801,314) = $19,603,770,221 = $19.60 billion EDOrganize Pages b. The weighted average cost of capital is about 5.22%, calculated as follows: Intrinsic value of debt] [ Intrinsic value of equity] Redact Tw = ["d Intrinsic value of firm ] + I Intrinsic value of firm $8.72 billion TW = 0.0267 X $19.60 billion + $8.72 billion| + 0.0635 x $19.60 billion $19.60 billion + $8.72 billion] TW = 0.00822 + 0.04395 Create, edit and sign PDF TW = 0.05217 forms & agreements Marks for this submission: 0.00/2.00. Start Free Trial H Type here to search O X O 1:45 PM 11/7/2020