Case #2:

Estimating Walmarts cost of capital

Case questions

The case requires you to estimate weighted-average cost of capital for Walmart.

Q1. What is the amount of risk premium on Walmarts debt? What credit rating does it imply?

Q2. Use different methods to estimate WMTs growth rate. Indicate your preferred method.

Q3. Using data from the case, indicate or estimate all inputs needed to estimate WACC. Estimate cost of debt and equity using all possible methods and indicate which of these methods should be used and why. Use market data to estimate wights of each ingredient as much as you can.

Q4. Provide interpretation of the shape of the yield curve. What does it suggest?

Q5. What coupon rate would WMT pay on a newly issued debt?