Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

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%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions