WACC for Apple Inc.

Risk free rate =10 year maturity bond = 3.5%

Default spread of Apple = 0.63% (Rated AA1 by Moody's)

Equity market risk premium = 5% = (Market return - risk free rate)

Tax rate = 40%

Beta = 1.31

Cost of debt = Risk free rate + default spread = 3.5% + 0.63% = 4.13%

After tax cost of debt = cost of debt * (1 - tax) = 4.13*(1 - .40) = 2.478%

Calculating after tax cost of debt at this point will, save us from calculating it at the point of WACC calculation, thus making our calculation simpler

Cost of equity = Risk free rate + beta*equity risk premium = 3.5% + 1.31*5% = 3.5% + 6.55% = 10.05%

Apple's debt (D)= 122.19 Billion.

Apple's market cap (E)= 2000Billion

D/(D+E) = 122.19/2122.19 = 0.0575

E/(D+E) = 2000/2122.19 = .9424

WACC = (after tax cost of debt * D/(D+E)) + ( cost of equity * E/(D+E))

= 2.478 * 0.0575 + 10.05 * 0.9424

= 0.1424 + 9.47112

=9.61%

Therefore WACC of Apple Inc is 9.61%

Base on my information above, would you feel confident that my WACC for Apple Inc is correct?