Estimate the most current Weighted Average Cost of Capital of Fiserv Inc $($ticker: FI$).$ Use CAPM to estimate the cost of equity. Assume that the capital structure $($the market debt$-$to$-$equity ratio$)$ observed as of the most recent annual financial statements remains in place forever for the company. Also assume that the market risk premium is $5\%$ and that the marginal tax rate is $21\%.$

Suggested sources of the data:

SEC's Edgar database $-$ for financial statements and annual or quarterly report $(10-$K or $10-Q)$

Stock returns from CRSP database $-$ to calculate the beta $($an Excel file with the data is available on CANVAS. Column $B$ is the date of the end of the observation month, $F$ is monthly returns on Fiserv's stock, $H$ is CRSP value$-$weighted index, $J$ is S&P $500$ index returns$).$

FINRA's TRACE database $-$ for public bond yields and prices

U$.$S$.$ Treasury's web$-$site $-$ for T$-$bond rates

Yahoo's finance web$-$site or

NASDAQ.com $-$ for the stock price around the date of the most recent financial report.

Recipe:

a$)$ Calculate the cost of debt using most recent yields from a representative set of Fiserv public bonds.

b$)$ Calculate the market value of Fiserv debt using book value of debt adjusted by the price to face value multiple of a set of public bonds of Fiserv.

c$)$ The marginal tax rate is provided.

d$)$ Calculate the market value of equity using number of shares outstanding from the most recent financial report and historical stock price as of that date from NASDAQ or Yahoo.

e$)$ Calculate the cost of equity using CAPM. For that, you are provided the market risk premium. Use current yield on the $10-$year Treasury bond as the risk$-$free rate, and calculate the beta of Fiserv stock using $5$ years of monthly stock returns and VW CRSP portfolio as the market portfolio. Data on stock returns are provided in the Excel file using CRSP database.

f$)$ Combine it all to calculate Weighted Average Cost of Capital $($WACC$)$ for Fiserv.