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I am working on a finance paper for The Home Depot. I am sutck on the company valuation. I got most of the info but
I am working on a finance paper for The Home Depot. I am sutck on the company valuation. I got most of the info but am having trouble solving. I need to use all the info in the red boxes to solve the answers for the company valuation in the BLUE box and solve for all the green empty boxes.
Wacc Analysis Equity Market Cap. 181,930,000,000 %Debt-23,601,000,000/ (23,601,000,000 + Equity 181,930,000,000)-8.7% % Equity-1 % Debt % Equity = 1-8.796-913-91.3% Interest Expense $972,000,000 Cost of Debt-Interest Expense/Debt Cost of Debt $972,000,000/ 23,601,000,000-0.0411- 4.11% Tax Rate : Income Tax Expense Income Before Tax 4,534,000/ 12,491,000 = 36.29% Cost of Equity- Risk free rate+Beta * (Market Risk Premium) 2.27% + 1.09 * (11%-2.27%) : 2.27%+ 1.09 * 10.75% . 1 196-1 1 96% Risk free rate: look up the yield on 10 year US Treasury bonds-2.27% Beta: 1.09 Market Risk Premium: Assume 11% minus the risk-free rate: 1 1%-2.27%; 1075: 10.75% WACC % Debt * Cost of Debt * (1-Tax Rate) + % Equity * Cost of Equity WACCz 8.7% * 4.11% *Lt 3629%) + 91.3% * 11.96% -8.7% 4.11% * .6371 + 91.3% * 11.96-11.147%
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