Scenario: Costco wholesale is building a new warehouse and needs to borrow $50 million in which $20 million will be self funded, and $30 will be borrowed (Debt) . 

 

1. Estimate the cost of capital or (WACC) for firm based upon  prior decisions.  couple of options below. Read through these carefully.????
2. If  are able to justify 100% self-funding, then no calculation is required.  are able to simply do a web search for "Costco WACC" and use the figure from that site (ie Finbox, GuruFocus, ValueInvesting, etc).  discussion would be as follows: (1) define WACC (2) state AND cite your figure (3) include a sentence that since  are 100% self-funding, this amount is already included within the WACC figure as part of the total equity variable (4) discuss what this WACC figure implies for  firm (ie minimum discount rate)
3. If  raise additional NEW capital via debt or equity or some combination including either, then  will need to recalculate  WACC using an online WACC calculator.  will need to source variables for total equity, total debt, cost of equity, cost of debt, and tax rate. Total equity and total debt variables may be found on Yahoo!Finance. Make sure  variable is updated to include the funds you are raising. The cost of equity, cost of debt and tax rate may be found on sites such as FinBox, GuruFocus or value investing. Plug in the variables into  calculator for an updated WACC figure. For the discussion: (1) define WACC (2) state AND cite BOTH your overall figure AND your variables (3) discuss what this figure implies for your firm (ie minimum discount rate).

Please Use this Cite for WACC Information : 

 

https://www.gurufocus.com/term/wacc/COST/WACC-Percentage/Costco-Wholesale