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Estimate IBM's weighted average cost of capital. $ in billions Proportion Cost of capital Weighted Average Market value of equity (r e ) $143.48 0.922

Estimate IBM's weighted average cost of capital.

$ in billions Proportion Cost of capital Weighted Average Market value of equity (r_e) $143.48 0.922 12.6% 11.62% Market value of debt (r_d) $12.08 0.078 4.875% 0.38% Market value of debt & equity $155.56 12.0%

What is the source of the risk represented by the WACC estimate for IBM? For the cost of equity capital?

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