Chapter 2:

2) Using the most recently available annual financial statements (10-K) for Apple (AAPL) from SEC Edgar (Filing Date: 10/28/2022).

1. Restate the balance sheet so that accounting enterprise value is on the left and right hand sides

2. Use the most recently available market capitalization data to restate the enterprise value in market terms (you can use market cap from Yahoo!)

3. Examine Apples consolidated statement of cash flows and transform this into a free cash flow. Assume the tax rate is 21%.

4. Use the template for the ABC corp. valuation in section 2.7 (p. 67) to value Apples stock. Use the FCF value from #3. Assume that the weighted average cost of capital for Apple is 12%, the FCF growth rate for years 1-5 is 10% and the long-term FCF growth rate is 4%

Chapter 3:

3) Using the most recent data available for Apple (AAPL) calculate the firms weighted average cost of capital (WACC). You can assume a tax rate of 21%.

1. Calculate the market value of equity (you can use the most recently available market cap data from Yahoo!)

2. Calculate the value of debt (use book net debt from the 10-K)

3. Calculate the cost of debt using a market-adjusted credit rating approach (use credit rating spread over 10 yr treasury yield)

4. Calculate the cost of equity using the CAPM i. You must compute beta using the most recent 36 months of price data for AAPL (ending in January 2023), assume the expected return on the market is 12.17% and use the most recently available data for the risk-free rate (long-term) and SPY prices as a proxy for market returns.

5. Use the answers from #1-4 to calculate the WACC for AAPL 6. Re-calculate the value of AAPL in Chapter 2 exercise #4 using the WACC in #5