Use the book value of total long-term liabilities and market value of equity as of the fiscal year-end (January 30, 2022
Posted: Sun May 29, 2022 5:04 pm
Use the book value of total long-term liabilities and market
value of equity as of the fiscal year-end (January 30, 2022) to
work out the proportion of debt and equity (Hint: you can obtain
Home Depot’s current and historical stock prices from Yahoo
Finance; Use the adjusted closing stock price on the last trading
day if the fiscal year-end, i.e., January 30, 2022, falls on a
non-trading day).
The cost of debt, cost of equity, and debt-to-equity (D/E) ratio
are assumed to remain constant over time.
Information: Common stock, par value $0.05; authorized: 10,000
shares; issued: 1,792 shares at January 30, 2022 and 1,789 shares
at January 31, 2021; outstanding: 1,035 shares at January 30, 2022
and 1,077 shares at January 31, 2021.
Please help me calculate the WACC please
Required (a) Calculate Home Depot's cost of equity using CAPM. (2 marks) (b) Calculate Home Depot's cost of debt. (c) Calculate Home Depot's WACC. (2 marks) (2 marks) (a) 0.0594 Cost of equity (ke) Risk free rate 3% Equity Beta 0.98 Market rate 6% (b) Cost of debt (kd) 0.03001 Interest expense 1,347 Book value of total long-term liabilities 44,879 (c) WACC 0 CAPM 0.0594 E/V D/V Kd 0.03001 25% Tax rate
value of equity as of the fiscal year-end (January 30, 2022) to
work out the proportion of debt and equity (Hint: you can obtain
Home Depot’s current and historical stock prices from Yahoo
Finance; Use the adjusted closing stock price on the last trading
day if the fiscal year-end, i.e., January 30, 2022, falls on a
non-trading day).
The cost of debt, cost of equity, and debt-to-equity (D/E) ratio
are assumed to remain constant over time.
Information: Common stock, par value $0.05; authorized: 10,000
shares; issued: 1,792 shares at January 30, 2022 and 1,789 shares
at January 31, 2021; outstanding: 1,035 shares at January 30, 2022
and 1,077 shares at January 31, 2021.
- Use The Book Value Of Total Long Term Liabilities And Market Value Of Equity As Of The Fiscal Year End January 30 2022 1 (89.47 KiB) Viewed 17 times
Required (a) Calculate Home Depot's cost of equity using CAPM. (2 marks) (b) Calculate Home Depot's cost of debt. (c) Calculate Home Depot's WACC. (2 marks) (2 marks) (a) 0.0594 Cost of equity (ke) Risk free rate 3% Equity Beta 0.98 Market rate 6% (b) Cost of debt (kd) 0.03001 Interest expense 1,347 Book value of total long-term liabilities 44,879 (c) WACC 0 CAPM 0.0594 E/V D/V Kd 0.03001 25% Tax rate