Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help with B and D and E. please. NOTE: Market information changes all the time. Please provide the specific date when you get

image text in transcribedimage text in transcribed

I need help with B and D and E. please.

image text in transcribedimage text in transcribed
NOTE: Market information changes all the time. Please provide the specific date when you get the financial data. Hyperlinks for stock information for COST and risk-free rate Ticker symbol: COST Yahoo Finance Stock Quote Yahoo! Finance Stock Quote 10/28/19 Yahoo! Finance Key Statistics Yahoo! Finance Key Statistic 10/28/19 Yahoo ! Finance Analyst Estimates Yahoo! Finance Analyst Estimates 10/28/19 Yahoo ! Finance Bond Center Yahoo! Finance Bond Center 10/28/19 Stock quote link Stock price 298.94 Dividend: 2.60 Key statistics link Beta 0.93 Shares outstanding: 439,660,000 Analysts' estimates link 5-year dividend growth: 7.34% Bond center link: Risk-free rate: 1.65% Please use 6-month T- bill rate from FINRA Market risk premium: 7.00% Market value of equity: $ 131,431,960,400 Cost of equity Dividend discount model: 8.27% CAPM: 8.16% Cost of equity: 8.24% I provided hyperlinks for FINRA and SEC EDGAR web sites. Make Hyperlinks for COST bond quotes from FINRA and SEC EDGAR. FINRA Bond Center Search EDGAR Company Search Book Value Quoted Market Value Maturity Book Value Weight Coupon Rate Weighted Ave Coupon Rate Price Market Value Weight YTM Weighted Ave YTM 2021 2.15% 2022 2.25% 2022 2.30% 2024 2.75% 2027 3.00% 12.45% We will ingore other long term debt and 2019 maturity. Cost of debt= Market Value Cost of Debt Tax rate: 21%AutoSave O OFF ~ 4 6 3 WACC.xItx Q Home Insert Draw Page Layout Formulas Data Review View Share Comments Define Name Ev Trace Precedents v Calculate Now Trace Dependents Insert AutoSum Recently Financial Logical Text Date & Lookup & Math & More Used Create from Selection Function Time Reference Trig Functions Remove Arrows Show Error Formulas Checking Calculation Calculate Sheet Options D27 X fx D E F G H J K M N 0 P Q Chapter 13 - Case You want to calculate the WACC for COSTCO WHOLESALE CORP (COST). Complete the following steps to construct a spreadsheet that can be updated. a. Using an input for the ticker symbol, create hyperlinks to the web pages that you will need to find all of the information necessary to calculate the cost of equity of COST. Use a market risk premium of seven percent when using CAPM b. Create hyperlinks to go to the FINRA bond quote website and the SEC EDGAR database for the company's bonds. Create a table that calculates the cost of debt for the company. Assume the tax rate is 21 percent. 10 C . Finally, calculate the market value weights for debt and equity. What is the WACC for COST? 11 12 d. Compare COSTCO's WACC with the industry's WACC (Retail - General) Provided by Professor Aswath Damodaran and comment. 13 http:/people.stern.nyu.edu/adamodar/New Home Page/datafile/wacc.htm 14 15 e. Calculate COSTCO's return on invested capital (ROIC), compare it with your calucated WACC, and comm 16 https://www.investopedia.com/terms/r/returnoninvestmentcapital.asp 17 18 19 20 21 22 23 25 26 27 35 36 37 38 39 Chapter 13 Section 13.10 Case Instructions Solutions Sheet1 + 100% Ready +

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

International financial management

Authors: Jeff Madura

13th edition

978-1337099738, 1337099732, 9781337515894, 1337515892, 978-1337587211

More Books

Students also viewed these Finance questions

Question

_____ 8. the completion of a business deal without the use of money

Answered: 1 week ago

Question

_____ 6. the top trading partner of the United States

Answered: 1 week ago