Part b. The following is a snapshot of the financial statements of Amazon Inc. ($AMZN).

Profit & Loss (in $ millions)	FY19	FY18
Total Revenue	280,522	232,887
Operating Profit	14,541	12,421
Finance Costs	1,600	1,417
Profit before tax	13,976	11,261
Tax Expense	2,374	1,197
Net income	11,588	10,073

Balance Sheet (in $ millions)	FY19	FY18
Common Stock	5,000	5,000
Other equity capital	57,060	38,549
TOTAL SHAREHOLDERS FUNDS	62,060	43,549
Long Term Borrowings	23,414	23,495
Short Term Borrowings	0	0
TOTAL CAPITAL AND LIABILITIES	163,188	119,099
Fixed Assets	128,914	87,547
Cash and Cash Equivalents	55,021	41,250
Total Current Assets	96,334	75,101
TOTAL ASSETS	225,248	162,648

You are required to compute the various components of WACC and the WACC of Amazon using the above information.

1. Compute the cost of debt (Kd) of the company. (2 marks)
2. Compute the cost of equity (Ke) of the company using CAPM. (3 marks)
3. Compute the capital structure of the company. (5 marks)
4. Compute the WACC of the company taking corporate tax rate as 21%. (5 marks)
5. How would you interpret the values of Kd, Ke, and WACC computed in this question for a technology company such as Amazon? Draw your analogies from corresponding prices of other competitive companies in the landscape to arrive at your conclusions. (10 marks)

Further, the following information is available for computing the cost of equity:

For CAPM, you may refer to the share price data of AMZN and the NASDAQ index data (in US$) for one year from 1 Jan 2019 to 31 Dec 2019 (attached with this document) for computing the Beta. Necessary adjustment in the beta would be required to get a better estimate of the cost of equity.

Consider Rf = 1%, equity risk premium = 6%.

HI - I dont see option to comment and to upload/attach the excel file anywhere (Please suggest)

E 1 M O U Y B D Date AMZN NASDAQ 1/2/2019 1539.13 6665.94 1/3/2019 1500.28 6463.5 1/4/2019 1575.39 6738.86 1/7/2019 1629.51 6823.47 1/8/2019 1656.58 6897 1/9/2019 1659.42 6957.08 1/10/2019 1656.22 6986.07 1/11/2019 1640.56 6971.48 1/14/2019 1617.21 6905.92 1/15/2019 1674.56 7023.83 1/16/2019 1683.78 7034.69 1/17/2019 1693.22 7084.46 1/18/2019 1696.2 7157.23 1/22/2019 1632.17 7020.36 1/23/2019 1640.02 7025.77 1/24/2019 1654.93 7073.46 1/25/2019 1670.57 7164.86 1/28/2019 1637.89 7085.68 1/29/2019 1593.88 7028.29 1/30/2019 1670.43 7183.08 1/31/2019 1718.73 7281.74 2/1/2019 1626.23 7263.87 2/4/2019 1633.31 7347.54 2/5/2019 1658.81 7402.08 2/6/2019 1640.26 7375.28 2/7/2019 1614.37 7288.35 2/8/2019 1588.22 7298.2 2/11/2019 1591 7307.9 2/12/2019 1638.01 7414.62 2/13/2019 1640 7420.38 2/14/2019 1622.65 7426.95 2/15/2019 1607.95 7472.41 2/19/2019 1627.58 7486.77 2/20/2019 1622.1 7489.07 2/21/2019 1619.44 7459.71 2/22/2019 1631.56 7527.54 F G H Date AMZN NASDAQ 2/25/2019 1633 7554.46 2/26/2019 1636.4 7549.3 2/27/2019 1641.09 7554.51 2/28/2019 1639.83 7532.53 3/1/2019 1671.73 7595.35 3/4/2019 1696.17 7577.57 3/5/2019 1692.43 7576.36 3/6/2019 1668.95 7505.92 3/7/2019 1625.95 7421.46 3/8/2019 1620.8 7408.14 3/11/2019 1670.62 7558.06 3/12/2019 1673.1 7591.03 3/13/2019 1690.81 7643.41 3/14/2019 1686.22 7630.91 3/15/2019 1712.36 7688.53 3/18/2019 1742.15 7714.48 3/19/2019 1761.85 7723.95 3/20/2019 1797.27 7728.97 3/21/2019 1819.26 7838.96 3/22/2019 1764.77 7642.67 3/25/2019 1774.26 7637.54 3/26/2019 1783.76 7691.52 3/27/2019 1765.7 7643.38 3/28/2019 1773.42 7669.17 3/29/2019 1780.75 7729.32 4/1/2019 1814.19 7828.91 4/2/2019 1813.98 7848.69 4/3/2019 1820.7 7895.55 4/4/2019 1818.86 7891.78 4/5/2019 1837.28 7938.69 4/8/2019 1849.86 7953.88 4/9/2019 1835.84 7909.28 4/10/2019 1847.33 7964.24 4/11/2019 1844.07 7947.36 4/12/2019 1843.06 7984.16 4/15/2019 1844.87 7976.01 Date AMZN NASDAQ 4/16/2019 1863.04 8000.23 4/17/2019 1864.82 1864.82 7996.08 4/18/2019 1861.69 1861.69 7998.06 4/22/2019 1887.31 8015.27 4/23/2019 1923.77 1923.77 8120.82 4/24/2019 1901.75 8102.01 4/25/2019 1902.25 8118.68 4/26/2019 1950.63 8146.4 4/29/2019 1938.43 8161.85 4/30/2019 1926.52 8095.39 5/1/2019 1911.52 8049.64 5/2/2019 1900.82 8036.77 5/3/2019 1962.46 8164 5/6/2019 1950.55 8123.29 5/7/2019 1921 7963.76 5/8/2019 1917.77 7943.32 5/9/2019 1899.87 1899.87 7910.59 5/10/2019 1889.98 1889.98 7916.94 5/13/2019 1822.68 1822.68 7647.02 5/14/2019 1840.12 7734.49 5/15/2019 1871.15 7822.19 5/16/2019 1907.57 7898.05 5/17/2019 1869 7816.28 5/20/2019 1858.97 7702.38 5/21/2019 1857.52 7785.72 5/22/2019 1859.68 7750.84 5/23/2019 1815.48 7628.28 5/24/2019 1823.28 7637.01 5/28/2019 1836.43 7607.35 5/29/2019 1819.19 7547.31 5/30/2019 1816.32 1816.32 7567.72 5/31/2019 1775.07 7453.15 6/3/2019 1692.69 1692.69 7333.02 6/4/2019 1729.56 1729.56 7527.12 6/5/2019 1738.5 7575.48 6/6/2019 1754.36 7615.55 N P Date AMZN NASDAQ 6/7/2019 1804.03 7742.1 6/10/2019 1860.63 7823.17 6/11/2019 1863.7 7822.57 6/12/2019 1855.32 1855.32 7792.72 6/13/2019 1870.3 7837.13 6/14/2019 1869.67 7796.66 6/17/2019 1886.03 7845.02 6/18/2019 1901.37 7953.88 6/19/2019 1908.79 1908.79 7987.32 6/20/2019 1918.19 8051.34 6/21/2019 1911.3 8031.71 6/24/2019 1913.9 8005.7 6/25/2019 1878.27 7884.72 6/26/2019 1897.83 7909.97 6/27/2019 1904.28 7967.76 6/28/2019 1893.63 8006.24 7/1/2019 1922.19 8091.16 7/2/2019 1934.31 8109.09 7/3/2019 1939 8170.23 7/5/2019 1942.91 8161.79 7/8/2019 1952.32 8098.38 7/9/2019 1988.3 8141.73 7/10/2019 2017.41 8202.53 7/11/2019 2001.07 8196.04 7/12/2019 2011 8244.14 7/15/2019 2020.99 8258.19 7/16/2019 2009.9 8222.8 7/17/2019 1992.03 8185.21 7/18/2019 1977.9 8207.24 7/19/2019 1964.52 8146.49 7/22/2019 1985.63 8204.14 7/23/2019 1994.49 8251.4 7/24/2019 2000.81 8321.5 7/25/2019 1973.82 8238.54 7/26/2019 1943.05 8330.21 7/29/2019 1912.45 8293.33 R S T Date AMZN NASDAQ 7/30/2019 1898.53 8273.61 7/31/2019 1866.78 8175.42 8/1/2019 1855.32 8111.12 8/2/2019 1823.24 8004.07 8/5/2019 1765.13 7726.04 8/6/2019 1787.83 7833.27 8/7/2019 1793.4 7862.83 8/8/2019 1832.89 8039.16 8/9/2019 1807.58 7959.14 8/12/2019 1784.92 7863.41 8/13/2019 1824.34 8016.36 8/14/2019 1762.96 7773.94 8/15/2019 1776.12 7766.62 8/16/2019 1792.57 7895.99 8/19/2019 1816.12 8002.81 8/20/2019 1801.38 1801.38 7948.56 8/21/2019 1823.54 8020.21 8/22/2019 1804.66 7991.39 8/23/2019 1749.62 7751.77 8/26/2019 1768.87 7853.74 8/27/2019 1761.83 7826.95 8/28/2019 1764.25 7856.88 8/29/2019 1786.4 7973.39 8/30/2019 1776.29 7962.88 9/3/2019 1789.84 7874.16 9/4/2019 1800.62 7976.88 9/5/2019 1840.72 8116.83 9/6/2019 1833.51 1833.51 8103.07 9/9/2019 1831.35 8087.44 9/10/2019 1820.55 8084.16 9/11/2019 1822.99 8169.68 9/12/2019 1843.55 8194.47 9/13/2019 1839.34 8176.71 9/16/2019 1807.84 8153.54 9/17/2019 1822.55 8186.02 9/18/2019 1817.46 8177.39 V W X Date AMZN NASDAQ 9/19/2019 1821.5 8182.88 9/20/2019 1794.16 8117.67 9/23/2019 1785.3 8112.46 9/24/2019 1741.61 7993.63 9/25/2019 1768.33 8077.38 9/26/2019 1739.84 8030.66 9/27/2019 1725.45 7939.63 9/30/2019 1735.91 7999.34 10/1/2019 1735.65 7908.68 10/2/2019 1713.23 7785.25 10/3/2019 1724.42 7872.26 10/4/2019 1739.65 7982.47 10/7/2019 1732.66 7956.29 10/8/2019 1705.51 7823.78 10/9/2019 1721.99 7903.74 10/10/2019 1720.26 7950.78 10/11/2019 1731.92 8057.04 10/14/2019 1736.43 8048.65 10/15/2019 1767.38 8148.71 10/16/2019 1777.43 8124.18 10/17/2019 1787.48 8156.85 10/18/2019 1757.51 8089.54 10/21/2019 1785.66 8162.99 10/22/2019 1765.73 8104.3 10/23/2019 1762.17 8119.79 10/24/2019 1780.78 8185.8 10/25/2019 1761.33 8243.12 10/28/2019 1777.08 8325.99 10/29/2019 1762.71 8276.85 10/30/2019 1779.99 8303.98 10/31/2019 1776.66 8292.36 11/1/2019 1791.44 8386.4 11/4/2019 1804.66 8433.2 11/5/2019 1801.71 8434.68 11/6/2019 1795.77 8410.63 11/7/2019 1788.2 8434.52 Z AA AB Date AMZN NASDAQ 11/8/2019 1785.88 1785.88 8475.31 11/11/2019 1771.65 8464.28 11/12/2019 1778 8486.09 11/13/2019 1753.11 8482.1 11/14/2019 1754.6 8479.02 11/15/2019 1739.49 8540.83 11/18/2019 1752.53 8549.94 11/19/2019 1752.79 8570.66 11/20/2019 1745.53 8526.73 11/21/2019 1734.71 8506.21 11/22/2019 1745.72 8519.88 11/25/2019 1773.84 8632.49 11/26/2019 1796.94 1796.94 8647.93 11/27/2019 1818.51 8705.18 11/29/2019 1800.8 8665.47 12/2/2019 1781.6 8567.99 12/3/2019 1769.96 1769.96 8520.64 12/4/2019 1760.69 8566.67 12/5/2019 1740.48 8570.7 12/6/2019 1751.6 8656.53 12/9/2019 1749.51 8621.83 12/10/2019 1739.21 8616.18 12/11/2019 1748.72 8654.05 12/12/2019 1760.33 8717.32 12/13/2019 1760.94 1760.94 8734.88 12/16/2019 1769.21 8814.23 12/17/2019 1790.66 8823.36 12/18/2019 1784.03 8827.74 12/19/2019 1792.28 8887.22 12/20/2019 1786.5 8924.96 12/23/2019 1793 8945.65 12/24/2019 1789.21 8952.88 12/26/2019 1868.77 9022.39 12/27/2019 1869.8 9006.62 12/30/2019 1846.89 8945.99