This Tutorial contains 2 Different Course Projects\t\u00a0\tSecond Project\tThe purpose of this project is for you to have some practice working with financial concepts in the real world. This will involve integrating some material from throughout the course. The project will also involve the development of your own approach to doing the work. The project does not provide a step-by-step procedure for you to follow.\tYour task is to determine the WACC for a given firm using what you know about WACC as well as data you can find through research. Your deliverable is to be a brief report in which you state your determination of WACC, describe and justify how you determined the number, and provide relevant information as to the sources of your data.\tAssumptions\tAs you recall, the formula for WACC is\trWACC = (E\/E+D) rE + D\/(E+D) rD (1-TC)\tThe formula for the required return on a given equity investment is\tri= rf + \u03b2i * (RMkt-rf)\tRMkt-rf is the Market Risk Premium. For this project, you may assume the Market Risk Premium is 4% unless you can develop a better number.\trf is the risk free rate. The YTM on 10 year US Treasury securities is a good approximation.\tYou may assume a corporate tax rate of 40%.\tOne good source for financial data for companies as well as data about their equity is http:\/\/finance.yahoo.com. By looking around this site, you should be able to find the market capitalization (E) as well as the \u03b2 for any publicly traded company.\tThere are not many places left where data about corporate bonds is still available. One of them is http:\/\/finra-markets.morningstar.com\/BondCenter. To find data for a particular company’s bonds, find the Quick Search feature, then be sure to specify corporate bonds and type in the name of the issuing company. This should give you a list of all of the company’s outstanding bond issues. Clicking on the symbol for a given bond issue will lead you to the current amount outstanding and the yield to maturity. You are interested in both. The total of all bonds outstanding is D in the above formula.\tIf you like, you can use the YTM on a bond issue that is not callable as the pre-tax cost of debt for the company.\tDeliverable\tWrite a two or three page report that contains the following elements:\t1.Your calculated WACC.\t2.How data was used to calculate WACC. This would be the formula and the formula with your values substituted.\t3.Sources for your data.\t4.A discussion of how much confidence you have in your answer. What were the limiting assumptions that you made, if any.<\/p>\n","protected":false},"excerpt":{"rendered":"
This Tutorial contains 2 Different Course Projects \u00a0 Second Project The purpose of this project is for you to have some practice working with financial concepts in the real world. This will involve integrating some material from throughout the course. Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-216801","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/216801","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=216801"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/216801\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=216801"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=216801"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=216801"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}