khaledmubarakcapital.xlsxSTudent_Fill_In
| khaled mubarak | Note: | use full numbers not 000s or millions | |
| Walmart | enter all % as decimal (10%=.10) | ||
| type below | type below | ||
| cost of debt: | source of information | ||
| Book Value Long Term Debt | 30,045,000,000.00 | balance sheet long term debit | |
| Bk Value Current Maturity Long Term Debt | (3,738,000,000.00) | balance sheet long term debit due this year | |
| total cost of long term debt | 26,307,000,000.00 | ||
| Interest Expense | 2,346,000,000.00 | income statement | |
| calculated interest rate | 0.09 | <= or you may type in average interest rate given in statements | |
| interest rate before tax, most recent debt issue | 5.38 | p71 annual report | |
| Earnings Before Tax | 15,123,000,000.00 | income statement | |
| Income Tax Expense | 4,600,000.00 | income statement | |
| Income Tax Rate | 0.03% | ||
| After Tax cost of debt | 5.37 | ||
| cost of equity | |||
| risk free rate | 2.51 | https://finance.yahoo.com/quote/WMT?p=WMT&.tsrc=fin-srch | |
| market rate | 6.00 | https://finance.yahoo.com/quote/WMT?p=WMT&.tsrc=fin-srch | |
| equity risk premium | 3.49 | ||
| cost of equit | 6.47 | ||
| number of common shares outstanding | 295,000,000.00 | 57 annual report | if annual report, include page number |
| market price per share | 101.74 | https://finance.yahoo.com/quote/WMT?p=WMT&.tsrc=fin-srch | |
| value of common stock | 30,013,300,000.00 | ||
| total value of capital | 56,320,300,000.00 | ||
| firm's beta | 0.66 | https://finance.yahoo.com/quote/WMT?p=WMT&.tsrc=fin-srch | |
| weighted cost of capital | 4.73 |
here you will type in your interpretation of what all you did means. How will the company use the cost of capital? Cost of debt is the interest a company pays on its borrowings. It is expressed as a percentage rate The cost of equity is the rate of return required by the company's ordinary shareholders in order for that investor to bear the risk of holding that company's shares. The return consists both of dividend and capital gains. weighted cost of capital is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted . All sources of capital, including common stock, preferred stock, bonds, and any other long-term debt, are included in the calculation. A firm’s WACC increases as the beta and rate of return on equity increase because an increase in WACC denotes a decrease in valuation and an increase in risk. Cost of capital is a necessary economic and accounting tool that calculates investment opportunity costs and maximizes potential investments in the process. The cost of capital is tied to the opportunity cost of pouring cash into a specific business project or investment. Once those costs are evaluated, businesses can make better decisions to deploy their capital to maximize profit potential. Each capital component makes up a certain percentage of the company's capital structure. To arrive at the true cost of capital for a business, the owner must multiply the percentage of the company's capital structure for each component, debt, and equity, by the cost of that component and sum the two parts.
https://finance.yahoo.com/quote/WMT?p=WMT&.tsrc=fin-srch https://finance.yahoo.com/quote/WMT?p=WMT&.tsrc=fin-srch https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=longtermrateYear&year=2019 https://finance.yahoo.com/quote/WMT?p=WMT&.tsrc=fin-srch https://finance.yahoo.com/quote/WMT?p=WMT&.tsrc=fin-srch
