Question
How to calculate the cost of capital for Raytheon Co. (ticker:RTN) by using three approaches: 1. CAPM (assume 5.5% market risk premium) 2. fundamental approach
How to calculate the cost of capital for Raytheon Co. (ticker:RTN) by using three approaches:
1. CAPM (assume 5.5% market risk premium)
2. fundamental approach
3. Debt-plus approach
look up their cost of debt by analyzing the yield to maturity on their outstanding bonds.
Question to the data from results: how the different investment horizon changes the expected cost of that debt. What would be the cost of debt over five years? Over 10 or over 20?
add up the outstanding value of those bond issues to get the market value of their debt. Then calculate the WACC using the market value of debt and equity, and the book value of debt and equity. Are they similar? Why are they so different, and which is better?
I am not sure my answers are correct, so I want to get the answers from Chegg Expert.
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