Problem
SOLVE: Calculate these for Apple Inc considering current market conditions assuming risk-free rate/ premium rate/ beta. Explain the equations and support your assumption choices for all the variables used in the equation. In each section, you must show and explain the equations that are used.
A. Cost of Equity (Common Stock) for Apple Inc
a. Using Beta from Regression and two Betas from analysts
b. Explain the Beta Chosen for CAPM and why
c. Capital Assets Pricing Model (include how determined RF (risk free) and RM (premium) or (RM - RF)]
d. Discounted Cash Flow (DCF) (only if dividends - include how determined)
e. Own-Bond-Yield-plus-Judgmental-Risk-Premium (include how determine risk premium)
B. Beta from Regression and two Betas from analysts
C. Beta Chosen for CAPM and why
D. Capital Assets Pricing Model (include how determined RF and[ RM or (RM - RF)]
E. Discounted Cash Flow (DCF) (only if dividends - include how determined)
F. Own-Bond-Yield-plus-Judgmental-Risk-Premium (include how determine risk premium)
G. Cost of Preferred Stock - Apple Inc.
H. Cost of Debt (make sure to include table that lists all bond issues with weighted average cost of debt) - Apple Inc.
I. Market Value of Debt (will have calculated above, but will need to add any long-term leases from balance sheet to get total market value of debt) - Apple Inc.
J. Market Value of Equity - Apple Inc.
K. Market Value of Preferred Stock - Apple Inc.
L. Value of Firm (Apple Inc.)
M. Apple's Tax Rate (explain how determined)
N. Weight for Equity - Apple Inc.
O. Weight for Preferred Stock - Apple Inc.
P. Weight for Debt - Apple Inc.
Q. WACC (Weighted Average Cost of Capital) - Apple Inc.
Conclusion: Provide a clear summary and conclusion of lessons learned from this report.