For Apple Inc.

A. Cost of Debt needed

1. Determine the market value of the firms debt issues?. Be sure to review Apple 10-K. Also, the website http://finra-markets.morningstar.com/BondCenter may be of assistance.

2 Calculate the firms composite YTM on its bonds. This can be achieved by calculating a weighted-average YTM for its bond issues.

3.After calculating the YTM for the bond issues, calculate the firms after-tax cost of debt. If the firms marginal tax rate cannot be identified in its 10-K, assume that the tax rate will be 35%.

B. Cost of Equity

1. Calculate the firms cost of equity using the capital asset pricing model (CAPM). The formula for the CAPM is ri = rf + i (RMkt - rf).

2. Assume the risk-free rate (rf) is the current rate of 10-year U.S. Treasury Bonds.

3. Calculate the market rate (RMkt) by calculating the market return on the Standard & Poors 500 for the past 2 calendar years. iv. The beta for Apple is 1.40.