Question
You are tasked with estimating the weighted average cost of capital for Lockheed Martin (ticker=LMT). LMT has a levered beta of 0.61. LMTs debt to
You are tasked with estimating the weighted average cost of capital for Lockheed Martin (ticker=LMT). LMT has a levered beta of 0.61. LMTs debt to equity ratio is 0.08. LMTs pre-tax cost of debt is 4%. Assume a risk free rate of 3%, a market risk premium of 5%, and a corporate tax rate of 35%.
Estimate LMTs WACC
Suppose the corporate tax rate falls to 20%. Estimate the impact on the WACC.
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Financial Modeling Using Excel And VBA
Authors: Chandan Sengupta
1st Edition
0471267686, 978-0471267683
