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WACC Assignment Template
| Estimating cost of equity using DGM | Solution Legend | ||||||
| Estimating Dividend Growth | Value given or to be downloaded from data website | ||||||
| Year | Dividend (from Yahoo) Author: If your company does not pay dividends, check FAQ for this module | Growth | 1+g | Formula/Calculation/Analysis required | |||
| Year 1 | |||||||
| Year 2 | |||||||
| Year 3 | |||||||
| Year 4 | |||||||
| Year 5 | |||||||
| Average | |||||||
| Current Price Author: From Yahoo Finance or other sources |
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| Expected Dividend | |||||||
| Growth Estimate | |||||||
| Cost of equity | |||||||
| Estimating cost of equity using CAPM (SML) | |||||||
| Item | Source | Value | |||||
| Risk free rate | Treasury Yield Curves | ||||||
| MRP | Damodaran (you may estimate historical risk premium or use implied premium) | ||||||
| beta | Yahoo | ||||||
| Cost of equity | |||||||
| Cost of equity used in WACC can be one of the values calculated, average, or some other number, subjectively adjusted | |||||||
| Cost of equity used | |||||||
| Estimating Cost of Debt | |||||||
| Most recently issued bond data, or bond with longest maturity | |||||||
| Source | FINRA-Morningstar | ||||||
| Maturity | |||||||
| Coupon rate | |||||||
| Face Value | |||||||
| Price | |||||||
| Payments | |||||||
| Number of payments | |||||||
| PV | |||||||
| Payment | |||||||
| Future Value | |||||||
| Per period rate | |||||||
| Cost of debt (annual) | |||||||
| Item | Source | Value | |||||
| Value of Debt | SEC | ||||||
| Market Cap | Yahoo | ||||||
| Tax rate | IRS | You may assume 21% | |||||
| WACC |
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