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you will estimate the weighted average cost of capital of a publicly traded company: Telus. Although you must use the most recent stock market data,

you will estimate the weighted average cost of capital of a publicly traded company:
Telus. Although you must use the most recent stock market data, you should use the
2021 Annual Report for the financial statement information. You are required to follow
the instructions outlined below and produce a written report that begins with an
executive summary of your findings, which should be no more than one page long.
Instructions
To estimate the cost of capital, you will need to estimate the cost of equity for Telus
using the capital asset pricing model. Because data on preferred shares can be
difficult to find, you can ignore them for the purposes of this assignment. You need to
estimate beta yourself, not just look it up. You must use the most recent market data
available. Show the calculations in your Excel file.
To estimate the risk-free rate, go to the Bank of Canada website and use an average
of the current 10-year bond rates. Use 6% as a risk premium, and use the current
Telus market capitalization. You will need to use the 2021 Telus financial statements
to calculate the pre-tax cost of debt, the tax rate, the after-tax cost of debt, and the
value of debt.
See the criteria below for mark distribution:
Professional presentation of your report including referencing (10 marks)
Correct use of CAPM to estimate the cost of equity (30 marks)
Correct calculation of the cost of debt (40 marks)
Correct calculation of the weighted average cost of capital (10 marks)
Discussion of the reasonability of your estimate (10 marks)
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