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some information the risk free rate is 1.902 Market Cap (the market value of equity) 254.89 B illion; Enterprise Value(market-value equity + net debt) 319.73
some information
- the risk free rate is 1.902
- Market Cap (the market value of equity)254.89 Billion; Enterprise Value(market-value equity + net debt) 319.73 Billion; Total Cash10.11 billion ; Total Cash Per Share5.62 ; Total Debt56.96 billion; Beta 0.7
- pre tex cost of debt 3.522%
questions:
- Compute the weights for equity and debt based on the market value of equity and market value of debt
- Calculate the company's cost of equity capital using the CAPM, the risk-free rate you collected, and a market risk premium of 5%.
- Assume that the company has a tax rate of 35%, calculate the effective (after-tax) cost of debt capital.
- Calculate the company's WACC using the market value of equity and debt.
- Calculate the company's net debt by subtracting its cash from its debt.Recalculate the weights for the WACC using the market value of equity, net debt, and enterprise value (note: enterprise value is the total market value of a firm's equity and debt, less the value of its cash and marketable securities). Recalculate the company's WACC using the weights based on the net debt. How much does it change?
- How confident are you of your estimates in steps 4 and 5?Which implicit assumptions did you make during your data collection efforts?
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