Questions
a. What is the most recent stock price listed
b. How many shares outstanding does the company have outstanding?
c. What is the market value of the equity or market capitalization?
d. What is the most recent dividend paid $/share
e. What is the stock´s Beta
f. On Yahoo!, go to the bonds link. What is the 3-month Treasury Bill Yield?
g. Assuming a market risk premium of 7% (check out chapter 10 for statistics behind this number), calculate the cost of equity using CAPM model. E(Ri) = Rf + [E(RM) - Rf] × ßi
h. Calculate the cost of equity using the dividend discount model. (Go to SEC Edgar and look at the last 10-K report. Look at dividends paid for the historical periods reported and calculate the dividend growth rate. Can you calculate the cost of equity using this method? Re = Do x (1+g) /Po +g
i. What is the cost of capital using questions g and h above. Average
j. and k. Fill in the table below: write the bonds characteristics, including yield to maturity for each bond outstanding.
l. Calculate the weighted average cost of debt both using Book Value and Market Value and compare. What effect would using one over the other have when you calculate the cost of debt?
(Term loan and revolving line of credit info is provided. It is assumed it trades at par )