Hi. I need help for this.

The two bonds are representative of the all the debts. How do i calcaulate the cost of debt in 2009 and the BETA and Cost of equity?

H. J. Heinz: Estimating the Cost of Capital in Uncertain Times Income Statement (numbers in thousands except per-share amounts; fiscal year ends in April) Revenie Costs of goods sold Gross profit 2008 9,885,556 6.233.420 3,652.136 2009 10,011,331 6.442.075 3,569.256 2010 10.494.983 6,700,677 3,794,306 SG&A expense Operating income 2,081,801 1.570,335 2,066,810 1,502,446 2.235,078 1,559.228 Interest expense Other income (expense) Income before taxes 323.289 (16,283) 1,230,763 275,485 92.922 1,319,883 250,574 (18.200 1.290,454 Income taxes Net income after taxes 372,587 858,176 375,483 944,400 358,514 931.940 Adjustments to net income Net income (13,251) 844.925 (21,328) 923,072 (67,048) 864,892 Dihited EPS Dividends per share 2.61 1.52 2.89 1.66 2.71 1.68 Data source: H. J. Heinz SEC filings, 200810. H. J. Heinz: Estimating the Cost of Capital in Uncertain Times Balance Sheet (numbers in thousands except per-share amounts; fiscal year ends in April) Cash Net receivables Inventories Other curent assets Total curent assets 2008 617.687 1.161.481 1,378,216 168,182 3,325,566 2009 373,145 1,171,797 1,237,613 162,466 2.945,021 2010 483.253 1,045,338 1,249,127 273,407 3,051,125 Net fixed assets Other noncurent assets Total assets 2.104.713 5,134,764 10,565,043 1.978,302 4,740.861 9,664,184 2.091.796 4,932,790 10,075,711 Accounts payable Short-term debt Curent portion of long-term debt Other curent liabilities Total curent liabilities 1.247.479 124.290 328,418 969,873 2,670,060 1,113,307 61.297 4,341 883,901 2,062,846 1,129,514 43,853 15.167 986,825 2.175,359 Long-term debt Other noncurent liabilities 4,730,946 1,276,217 6,007,163 5,076,186 1.246,047 6,322,233 4,559,152 1,392,704 5,951,856 Equity Total liabilities and equity 1.887.820 10,565,043 1,279,105 9,664,184 1,948,496 10,075,711 Shares outstanding (in millions of dollars) 311.45 314.86 317.69 Data source: H. J. Heinz SEC filings, 200810. Exhibit 3 H. J. Heinz: Estimating the Cost of Capital in Uncertain Times Capital Market Data (yields and prices as of the last trading day in April of the year indicated) Average Historic Yields 1-year 5-year 10-year 2003 1.22% 2.85% 3.89% 2004 1.55% 3.63% 4.53% 2005 3.33% 3.90% 4.21% 2006 4.98% 4.92% 5.07% 2007 4.89% 4.51% 4.63% 2008 1.85% 3.03% 3.77% 2009 0.49% 2.02% 3.16% 2010 0.41% 2.43% 3.69% 30-year! Moody's Aaa Moody's Baa 3-month commercial paper 4.79% 5.53% 6.65% 5.31% 5.87% 6.58% 4.61% 5.21% 5.97% 5.17% 5.95% 6.74% 4.89% 5.40% 6.31% 4.49% 5.51% 6.87% 4.05% 5.45% 8.24% 4.53% 5.13% 6.07% 1.21% 1.08% 2.97% 4.90% 5.22% 1.91% 0.22% 0.24% Heinz Capital Market Prices of Typical Issues Heinz stock price Bond price: 6.750% coupon, semiannual bond due 3/15/32 (Baa rated) Bond price: 6.625% coupon, semiannual bond due 10/15/12 (Baa rated) 2009 $34.42 91.4 116.5 2010 $46.87 116.9 113.7 Note that bond data were slightly modified for teaching purposes. Data sources: Federal Reserve, Value Line, Morningstar, and case writer estimates. H. J. Heinz: Estimating the Cost of Capital in Uncertain Times Income Statement (numbers in thousands except per-share amounts; fiscal year ends in April) Revenie Costs of goods sold Gross profit 2008 9,885,556 6.233.420 3,652.136 2009 10,011,331 6.442.075 3,569.256 2010 10.494.983 6,700,677 3,794,306 SG&A expense Operating income 2,081,801 1.570,335 2,066,810 1,502,446 2.235,078 1,559.228 Interest expense Other income (expense) Income before taxes 323.289 (16,283) 1,230,763 275,485 92.922 1,319,883 250,574 (18.200 1.290,454 Income taxes Net income after taxes 372,587 858,176 375,483 944,400 358,514 931.940 Adjustments to net income Net income (13,251) 844.925 (21,328) 923,072 (67,048) 864,892 Dihited EPS Dividends per share 2.61 1.52 2.89 1.66 2.71 1.68 Data source: H. J. Heinz SEC filings, 200810. H. J. Heinz: Estimating the Cost of Capital in Uncertain Times Balance Sheet (numbers in thousands except per-share amounts; fiscal year ends in April) Cash Net receivables Inventories Other curent assets Total curent assets 2008 617.687 1.161.481 1,378,216 168,182 3,325,566 2009 373,145 1,171,797 1,237,613 162,466 2.945,021 2010 483.253 1,045,338 1,249,127 273,407 3,051,125 Net fixed assets Other noncurent assets Total assets 2.104.713 5,134,764 10,565,043 1.978,302 4,740.861 9,664,184 2.091.796 4,932,790 10,075,711 Accounts payable Short-term debt Curent portion of long-term debt Other curent liabilities Total curent liabilities 1.247.479 124.290 328,418 969,873 2,670,060 1,113,307 61.297 4,341 883,901 2,062,846 1,129,514 43,853 15.167 986,825 2.175,359 Long-term debt Other noncurent liabilities 4,730,946 1,276,217 6,007,163 5,076,186 1.246,047 6,322,233 4,559,152 1,392,704 5,951,856 Equity Total liabilities and equity 1.887.820 10,565,043 1,279,105 9,664,184 1,948,496 10,075,711 Shares outstanding (in millions of dollars) 311.45 314.86 317.69 Data source: H. J. Heinz SEC filings, 200810. Exhibit 3 H. J. Heinz: Estimating the Cost of Capital in Uncertain Times Capital Market Data (yields and prices as of the last trading day in April of the year indicated) Average Historic Yields 1-year 5-year 10-year 2003 1.22% 2.85% 3.89% 2004 1.55% 3.63% 4.53% 2005 3.33% 3.90% 4.21% 2006 4.98% 4.92% 5.07% 2007 4.89% 4.51% 4.63% 2008 1.85% 3.03% 3.77% 2009 0.49% 2.02% 3.16% 2010 0.41% 2.43% 3.69% 30-year! Moody's Aaa Moody's Baa 3-month commercial paper 4.79% 5.53% 6.65% 5.31% 5.87% 6.58% 4.61% 5.21% 5.97% 5.17% 5.95% 6.74% 4.89% 5.40% 6.31% 4.49% 5.51% 6.87% 4.05% 5.45% 8.24% 4.53% 5.13% 6.07% 1.21% 1.08% 2.97% 4.90% 5.22% 1.91% 0.22% 0.24% Heinz Capital Market Prices of Typical Issues Heinz stock price Bond price: 6.750% coupon, semiannual bond due 3/15/32 (Baa rated) Bond price: 6.625% coupon, semiannual bond due 10/15/12 (Baa rated) 2009 $34.42 91.4 116.5 2010 $46.87 116.9 113.7 Note that bond data were slightly modified for teaching purposes. Data sources: Federal Reserve, Value Line, Morningstar, and case writer estimates