You are tasked with estimating the Weighted Average Cost of Capital (WACC) of Apple(AAPL) using the 2017 10-K annual reports which is readily available on https://www.sec.gov/edgar/search.

What would an appropriate proxy for the risk-free rate be in this case? Accordingly, what is the risk-free rate for the fiscal year you are analyzing?

Explain how and why obtaining a risk-free rate for the USA is more straightforward than other emerging markets. Illustrate this using a comparative example between the US and any selected emerging market.

Estimate the Beta of your selected company-year. Interpret it. Explain briefly how you estimated the Beta.

Explain why the Beta estimate you have obtained may be a flawed estimate of your companys systemic risk.

Obtain the unlevered Beta from your levered beta estimate. For the sake of simplicity, assume a tax rate of 35%.

Notwithstanding the flaws of relying on your Beta estimate, use the estimated Beta, the appropriate risk-free rate and expected market returns to obtain a cost of equity for your company. Run this using both levered and unlevered Beta.

As a CFO you are tasked with selecting the annual coupon rate on a five-year corporate bond to be sold at par value (a face value of $1,000). Write a paragraph or two justifying the selected coupon rate, based on reference to existing debt issuance by your chosen company, similar peers, or industry averages, and with reference to the current credit rating of the company and the relevant yields for that investment grade.

Estimate the cost of debt using the synthetic rating of your selected company, based on the companys interest coverage ratio. Interest coverage ratios can be mapped to default spreads from Aswath Damadorans website.

Calculate the WACC of the company based on the previously estimated costs of debt and equity. For the sake of simplicity, you can rely this time on book values to obtain debt and equity ratios.

Assume hypothetically that the USA is faced with uncertainty over future corporate tax policies as a result of hypothetical upcoming presidential elections. The Democratic candidate has promised to increase the corporate tax rate by up to 10% if she wins the presidential elections. The Republican candidate on the other hand has promised to reduce the corporate tax rate by up to 10% if he wins the presidential elections. Run a sensitivity analysis of this tax uncertainty on WACC. Briefly explain the results, comparing between the relative impact of tax increases as compared to tax decreases of similar magnitude. Explain briefly how would you potentially deal with such corporate tax uncertainty in any valuation exercise.