Question
The activities of Tesco are financed by both debt and equity. You are required to collect the following information and calculate the weighted average cost
The activities of Tesco are financed by both debt and equity.
You are required to collect the following information and calculate the weighted average cost of capital (WACC) of Tesco.
- Market Cap of Tesco. [5 marks]
- Long-term Debt of Tesco. (From the recent released balance sheet of company) [5 marks]
- Beta of Tesco as measure of systematic risk. [5 marks]
- 10-year Bond rate of UK government as proxy of risk-free rate. [5 marks]
- What is the weighted average cost of capital (WACC) of Tesco? (Hint: according to IG market, the average of recent yearly returns of FTSE100 as proxy of UK market is 7.5%; UK corporate tax rate is 19%). [10 marks]
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Cost Management Measuring Monitoring And Motivating Performance
Authors: Leslie G. Eldenburg, Susan Wolcott, Liang Hsuan Chen, Gail Cook
2nd Canadian Edition
1118168879, 9781118168875
