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Let's return to the case involving Amazon's project for the Echo III. In Week 2, we estimated the cash flows, which is the first step
Let's return to the case involving Amazon's project for the Echo III. In Week 2, we estimated the cash flows, which is the first step in analyzing project. We now need to estimate Amazon's cost of capital in order to continue our analysis of the project. Use the 10 year Treasury Bond rate as the risk free rate and assume that the market risk premium is 8% to find Amazon's cost of equity. Assume that Amazon's bonds are rated AAA and that Amazon's corporate tax rate is 25%. Find Amazon's weighted average cost of capital. Assume that the project will be financed with internal funds. You will need to find additional financial information from the Wall Street Journal and online at sites like http://finance.vahoo.com to complete your calculation. IF Let's return to the case involving Amazon's project for the Echo III. In Week 2, we estimated the cash flows, which is the first step in analyzing project. We now need to estimate Amazon's cost of capital in order to continue our analysis of the project. Use the 10 year Treasury Bond rate as the risk free rate and assume that the market risk premium is 8% to find Amazon's cost of equity. Assume that Amazon's bonds are rated AAA and that Amazon's corporate tax rate is 25%. Find Amazon's weighted average cost of capital. Assume that the project will be financed with internal funds. You will need to find additional financial information from the Wall Street Journal and online at sites like http://finance.vahoo.com to complete your calculation. IF
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