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What do you mean not clear? This is what I have got!!!!!!!!!!!!!!! Please help me with the questions and answer! As discussed on the Tuesday
What do you mean not clear?
This is what I have got!!!!!!!!!!!!!!!
Please help me with the questions and answer!
As discussed on the Tuesday Conference call - attached is the template for Weighted Average Cost of Capital (WACC). Example WACC (JSE) 2019.xls Use this model to calculate the WACC for this particular industry based on the following assumptions: (1) Update the companies with the latest stock price, debt and equity (2) Assume 60% Debt and 40% Equity for your company (3) Assume a corporate federal tax rate of 31% (4) Assume a risk free rate of return equal to the yield on a 20 year treasury bond (5) Assume a pre-tax return on debt capital of 10% K= 10.0% Pre-tax rate of return on debt capital. Weighted Average Cost of Capital Date of Quarterly Data Levered Beta Total Debt Debt % of Total Current Capital Stock Price Shares Outst. Equity Market Value Equity % of Total Capital Total Relevered Beta Invested Unlevered Using Target Structure Capital Beta (before size adjusment) Ticker Company $ Sep-00 VMC Nov-00 MLM Dec-00 LAF Nov-00 MLM Dec-00 LAF Nov-00 MLM Dec-00 - LAF Nov-00 MLM Dec-00 FRK 0.74 0.41 0.97 0.57 Abititi-Price American Paper Mills Boise Cascade Corp Glatfelter Co. Internation Paper Co. Kimberly-Clark Corp. Mead Corp. Union Camp Corp. Westvaco Corp. 0.69 0.80 0.73 0.80 0.73 0.80 0.73 0.80 0.64 $ 798.7 601.3 877.7 601.3 877.7 14.8% 22.5% 27.5% 22.5% 27.5% 22.5% 27.5% 22.5% 19.0% 45.52 44.40 34.24 44.40 34.24 44.40 34.24 44.40 38.40 100.7 $ 46.8 $ 67.61 $ 46.8 $ 67.61 S 46.8 $ 67.61 $ 46.8 $ 18.6 $ 4,586 2,076 2,315 2,076 2.315 2,076 2,315 2,076 713 85.2% 77.5% 72.5% 77.5% 72.5% 77.5% 72.5% 77.5% 81.0% 5384.1 2677.7 3192.8 2677.7 3192.8 2677.7 3192.8 2677.7 0.83 0.74 0.41 0.97 0.57 0.83 0.9 1.14 0.85 0.97 601.3 877.7 601.3 166.9 0.9 1.14 0.85 0.97 880.2 Median 0.75 $ 667 22.6% $ 2,283 2,283 77.4% $ 2,950 0.82 0.82 0.82 Assumed industry Norms Beta Debt % Equity % 0.82 32% 68% 5.0% After-tax rate of retum Debt Capital. Cost of Debt Ko = K.(1-Tc) = where K= Tc = 8.0% 37.0% Pre-tax rate of retum on debt capital. Corporate Federal Tax Rate 15.5% Rate of Retum on Common Equity Capital. Cost of Equity Ke = R +B (Rm-RI) where: R = B (levered) = Rm R= R = R= 8.0% 0.82 9.2% 17.2% 8.0% Risk free rate of return (yield on 20 year treasury bond). Beta or systematic risk for this type of equity investment. Market risk premium; the expected retum on a broad portfolio of stocks in the market (Rm) less the risk free rate (Rf). Weighted Average Cost of Capital WACC = Kee%)+K(d%) where: Ke- 15.5% e % = 68% K 5.0% d% 32% 5.0% After-tax rate of return Debt Capital. Cost of Debt Kd = K+(1-Tc) = where: K= Tc = 8.0% 37.0% Pre-tax rate of return on debt capital. Corporate Federal Tax Rate. 15.5% Rate of Return on Common Equity Capital. Cost of Equity Ke = R +B*(Rm-Rf) where: R = B (levered) = Rm Rp = Rm = Rp = 8.0% 0.82 9.2% 17.2% 8.0% Risk free rate of return (yield on 20 year treasury bond). Beta or systematic risk for this type of equity investment. Market risk premium; the expected return on a broad portfolio of stocks in the market (Rm) less the risk free rate (Rf). Weighted Average Cost of Capital WACC = Ke+(e%)+Kd-(d%) where: Ke 15.5% e % = 68% Ko = 5.0% d % = 32% WACC = 12.2% As discussed on the Tuesday Conference call - attached is the template for Weighted Average Cost of Capital (WACC). Example WACC (JSE) 2019.xls Use this model to calculate the WACC for this particular industry based on the following assumptions: (1) Update the companies with the latest stock price, debt and equity (2) Assume 60% Debt and 40% Equity for your company (3) Assume a corporate federal tax rate of 31% (4) Assume a risk free rate of return equal to the yield on a 20 year treasury bond (5) Assume a pre-tax return on debt capital of 10% K= 10.0% Pre-tax rate of return on debt capital. Weighted Average Cost of Capital Date of Quarterly Data Levered Beta Total Debt Debt % of Total Current Capital Stock Price Shares Outst. Equity Market Value Equity % of Total Capital Total Relevered Beta Invested Unlevered Using Target Structure Capital Beta (before size adjusment) Ticker Company $ Sep-00 VMC Nov-00 MLM Dec-00 LAF Nov-00 MLM Dec-00 LAF Nov-00 MLM Dec-00 - LAF Nov-00 MLM Dec-00 FRK 0.74 0.41 0.97 0.57 Abititi-Price American Paper Mills Boise Cascade Corp Glatfelter Co. Internation Paper Co. Kimberly-Clark Corp. Mead Corp. Union Camp Corp. Westvaco Corp. 0.69 0.80 0.73 0.80 0.73 0.80 0.73 0.80 0.64 $ 798.7 601.3 877.7 601.3 877.7 14.8% 22.5% 27.5% 22.5% 27.5% 22.5% 27.5% 22.5% 19.0% 45.52 44.40 34.24 44.40 34.24 44.40 34.24 44.40 38.40 100.7 $ 46.8 $ 67.61 $ 46.8 $ 67.61 S 46.8 $ 67.61 $ 46.8 $ 18.6 $ 4,586 2,076 2,315 2,076 2.315 2,076 2,315 2,076 713 85.2% 77.5% 72.5% 77.5% 72.5% 77.5% 72.5% 77.5% 81.0% 5384.1 2677.7 3192.8 2677.7 3192.8 2677.7 3192.8 2677.7 0.83 0.74 0.41 0.97 0.57 0.83 0.9 1.14 0.85 0.97 601.3 877.7 601.3 166.9 0.9 1.14 0.85 0.97 880.2 Median 0.75 $ 667 22.6% $ 2,283 2,283 77.4% $ 2,950 0.82 0.82 0.82 Assumed industry Norms Beta Debt % Equity % 0.82 32% 68% 5.0% After-tax rate of retum Debt Capital. Cost of Debt Ko = K.(1-Tc) = where K= Tc = 8.0% 37.0% Pre-tax rate of retum on debt capital. Corporate Federal Tax Rate 15.5% Rate of Retum on Common Equity Capital. Cost of Equity Ke = R +B (Rm-RI) where: R = B (levered) = Rm R= R = R= 8.0% 0.82 9.2% 17.2% 8.0% Risk free rate of return (yield on 20 year treasury bond). Beta or systematic risk for this type of equity investment. Market risk premium; the expected retum on a broad portfolio of stocks in the market (Rm) less the risk free rate (Rf). Weighted Average Cost of Capital WACC = Kee%)+K(d%) where: Ke- 15.5% e % = 68% K 5.0% d% 32% 5.0% After-tax rate of return Debt Capital. Cost of Debt Kd = K+(1-Tc) = where: K= Tc = 8.0% 37.0% Pre-tax rate of return on debt capital. Corporate Federal Tax Rate. 15.5% Rate of Return on Common Equity Capital. Cost of Equity Ke = R +B*(Rm-Rf) where: R = B (levered) = Rm Rp = Rm = Rp = 8.0% 0.82 9.2% 17.2% 8.0% Risk free rate of return (yield on 20 year treasury bond). Beta or systematic risk for this type of equity investment. Market risk premium; the expected return on a broad portfolio of stocks in the market (Rm) less the risk free rate (Rf). Weighted Average Cost of Capital WACC = Ke+(e%)+Kd-(d%) where: Ke 15.5% e % = 68% Ko = 5.0% d % = 32% WACC = 12.2%
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