Jx A B C D E F G H J K L M N P Q R Source: EQUITY Equity Market Value of Equity ($Million) Beta Risk Free Rate (3-mo) Expected Market Return DEBT Bond Book Value of Bond ($Million) Quoted Price Price at Offering =Market Value Percent of Total YTM Bond 1 Bond 2 Bond 3 Total Summary: WACC with Current Debt to Equity Ratio (Capital Structure) Cost of Equity (Levered) Cost of Debt we wd WACC (Levered) SPWR BE ES +JX A B C D E F G H I J K L M N P Q R Source: EQUITY Equity Market Value of Equity ($Million) Beta Risk Free Rate (3-mo) Expected Market Return DEBT Bond Book Value of Bond ($Million) Quoted Price Price at Offering =Market Value Percent of Total YTM Bond1 Bond 2 Bond 3 Total Summary: WACC with Current Debt to Equity Ratio (Capital Structure) Cost of Equity (Levered) Cost of Debt we wd WACC (Levered) SPWR BE ES +Jx A B C D E F G H J K L M N P Q R Source: EQUITY Equity Market Value of Equity ($Million) Beta Risk Free Rate (3-mo) Expected Market Return DEBT Bond Book Value of Bond ($Million) Quoted Price Price at Offering =Market Value Percent of Total YTM Bond 1 Bond 2 Bond 3 Total SO 0 0.00% Summary: WACC with Current Debt to Equity Ratio (Capital Structure) Cost of Equity (Levered) Cost of Debt we wd WACC (Levered) SPWR BE ES +Mini Case #2 WACC of Micro-Panel Power Company The Micro-Panel Power Company is a private company and expanding its operations in various states. While making capital decisions, the company uses 8% as its discount rate, Heidi, the manager of Micro-Panel Power Company realized that relatively little formal analysis has been used in its capital budgeting process. That is, the company has never attempted to determine its cost of capital. Heidi has come to you for help. She would like you to perform the analysis. Because the company is privately owned, she also wants you to use the pure play approach, i.e., examining other public companies doing similar projects and / or in the same business to estimate the cost of equity. About the Company: Micro-Panel Power Company provides homeowners with clean affordable solar energy and storage. It engages in the design, development, installation, sale, ownership, and maintenance of residential solar energy systems in the United States. It also sells solar leads. Solar service offerings are provided through leases and power-purchase agreements. Heidi has chosen the following three public rms as the representative companies: Bloom Energy Corp BE | Eversource Energy I ES Your job is to provide her a report and analysis on the cost ofcapital for Micro-Panel Power Company. Your report should answer the following questions in essay form, and provide an Excel Analysis [EXCEL-template for this case is provided): 1) For each company (i.e., SunPower, Bloom Energy, and Eversource Energy): collect the following information: 0 Market value of equity and beta [https: [ [nanceyahoocom 0 Market value of debt [hpz [ zfinra-markets.morningstar.com[BondCenter 2) For each company (i.e., SunPower, Bloom Energy, and Eversource Energy), nd the cost of equity and cost of debt [Tax Rate = 35%). 3) For each company [i.e., SunPower, Bloom Energy, and Eversource Energy), compute the WACC. 4-) What do you think about the WACC of each company? Are they similar or different? Are these results expected? Why? (Please go over their websites and obtain their business models etc.) 5) Based on your answer to question [4), what do think about Heidi's assessment? Are these companies good representatives for Micro-Panel Power Corp? 6) What is your recommendation for Heidi? Is 8% an appropriate discount rate? What discount rate should she use? (Assume: Micro-Panel Power Company currently has no debt)
