Toyota Motor Corporation's (TM) current price is $185.03; I want you to estimate (calculate) the cost of capital of this company (the WACC). estimate the cost of equity.

You need to estimate three more parameters in the formula besides the cost of equity that you already have: (1) the cost of debt, (2) the weight on debt, and (3) the weight on equity. To estimate the weights, calculate first the value of the company as the addition of the book value of financial debt plus the market value of equity, also known as Market capitalization. The weight on debt is the book value of the financial debt over the company's value, and the value of equity is just one minus the weight on debt. Assume that the cost of debt is the current risk-free rate plus 3.5 percent. Use a corporate tax rate of 21 percent.

After you estimate the cost of capital, share your results with us, and comment on the following questions: Do you think that the WACC in the future will increase or decrease for your company? Explain your reasoning based on the components (variables) that determine the value of the WACC.

To do this exercise you can get most (if not all) of the information from Yahoo Finance or Reuters.