0.28 0.48 0.42 Target D/D+S Target D/S Levered Beta 74% 2.85 1.62 Costs of Equity: Rf Lodging MRP 8.95% 7.43% Beta Requity 1.62 21.02% Costs of Debt: Rf Lodging 8.95% Spread Tax rate Rdebt(1-T) 1.10% 0.44 0.0563 WACCs: Lodging Target D/D+S Rdebt(1-T) S/D+S Requity WACC 74% 0.0563 26% 21.02% 9.63% Page 1 Sales Weighted Levered Beta 1.56
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Risk – Free Rate 3% + Beta Coefficient .36 Market Risk Premium 8% Cost of Equity 5.88% + Risk - Free Rate 3.% Weighted Cost of Equity 3.52% X Percentage of Total Capital Supplied by Equity 60% + Before Tax Cost of Debt 5.66% WACC 5..00% Weighted Cost of Debt 1.53% Before Tax Operating Profit in % 100% After Tax Cost of Debt 3.83% X X After Tax Operating Profit in 67.6% 40% of Total Capital Supplied by Debt 40% - Income Tax Rate 32.4% Rate of Return of
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buybacks and strong dividends. About 43.8% of the total capital of the company comes from debt and the remaining comes from equity. The cost of the different components of its capital structure are – debt: 2.92% (after-tax cost)‚ and equity: 9.49%. The WACC is 6.61%‚ based on the capital structure outlined. The effective tax rate is 35.4%. AT&T has had dividend growth for the last 25 years. The dividend growth this year was 2.5% and the last year was 12.7%. Dividends declared totalled $1.61 per share
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WACC Weighted Average Cost of Capital Formula The WACC Weighted Average Cost of Capital formula is complex‚ and can be broken into several components. The individual component costs are provided in the following sections. WACC Weighted Average Cost of Capital Variables V=Firm Total Value (Debt + Preferred Shares + Common Equity + Retained Earnings) Md=Market Value of Debt Mp=Market Value of Preferred Shares Mc=Market Value of Common Equity Mr=Market Value of Retained Earnings K=Current
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Executive Summary: The purpose of this paper is to identify the weighted average cost of capital (WACC) in relation with the firm value. Also‚ there are some aspects discussed in the paper regarding when a firm should accept a project and when to reject. Systematic risk will be also discussed in the paper concerning their target market and how risky is that. Finally‚ the approach that BlackBerry took into consideration to overcome their risk. Discussion: All companies’ assets are financed by
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Bonds Microsoft’s long-term debt is composed of eight long-term bonds. It also has two short-term bonds that mature this year and early next year. These bonds were neglected in this report. In this report the required return was calculated by using the coupon rates‚ market values‚ time until maturity‚ and tax rate. These values were all found on Microsoft’s 2012 financial statement. The weighted average cost of debt was then found through the multiplication of each bond’s required return and their
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In the video "A Place at the Table" it showcases eight American teens discussing their ancestors trials and tribulations of what they thought would be the American dream. Their names are Wislene‚ Peter‚ Samuel‚ Reina‚ Carol‚ David‚ Terry‚ and Deloria. Wislene is a descendent from Africa‚ her grandparents were stolen from their native land and forced into slavery in America. They were re-named and separated from each other. They had to endure social justice blatant racism and nightmares upon nightmares
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Video 0094-Subject: Science‚ the teacher did well at managing the time in his classroom. In the video there are two parts to how the class interacts; small groups leading into a whole class discussion. During the small groups‚ the teacher walks around the classroom observing and answering questions in each group. You can see the positive energy that he is displaying as he checks for understanding and cooperative working. The students are engaged and on task. I liked that he checked to see how the
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Calculate WACC using book values: The weight of debt is calculated by adding the current portion of long-term debt‚ notes payable and long-term debt‚ and dividing it by the sum of debt and equity. $5.4 + 855.3 + 435.9 = $1‚296.6 $1‚296.6 / (1‚296.6 + 3‚494.5) = .27 = 27% The weight of equity is calculated by dividing the total shareholder equity by the sum of debt and equity. $3‚494.5 / (1‚296.6 + 3‚494.5) = .73 = 73% Cost of Debt To find the cost of debt I subtracted the tax savings from
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its cash flow therefore it is a way to; a) Evaluate the Investment Decision b) Decide on a debt policy c) Appraise the performance of top managers 2) Compute the corporate WACC. Be sure to state all your assumptions to get the various inputs to the WACC. r_e=r_f+ β(EMRP) WACC= r_e (E/V)+ r_d (D/V)(1-t) E=Midland’s Equity Market Value D=Midland’s Net Debt (E/V)= Weight for the cost of equity (D/V)= Weight for the cost of V (E+D)= Midland’s total Market Value
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