Question
Kristian Thalen has just joined the corporate treasury group at Electrolux of Sweden, the multinational Swedish appliance maker. Electrolux is considering making an offer for
Kristian Thalen has just joined the corporate treasury group at Electrolux of Sweden, the multinational Swedish appliance maker. Electrolux is considering making an offer for GE's appliance business, and wants to revise its weighted average cost of capital for its analysis in its home currency, the Swedish kroner (SEK). Kristian has been assigned the task. Using the following assumptions, he goes step by step through the following questions.
| Assumptions | Values | |
| Swedish kroner, government bond rate (10-year) | 4.30% | |
| Electrolux credit risk premium | 1.20% | |
| Swedish corporate tax rate | 26.00% | |
| Electrolux beta | 1.30 | |
| Swedish equity market risk premium (equity return over risk-free) | 4.00% | |
| Electrolux shares outstanding | 286,130,000 | |
| Electrolux share price | SEK 182.00 | |
| Electrolux debt outstanding (SEK) | SEK 11,532,000,000 |
What is Electrolux's weighted average cost of capital?
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The Social Media Handbook For Financial Advisors
Authors: Matthew Halloran
1st Edition
1118208013, 978-1118208014
