Find and discern the appropriate data to determine a realistic assessment

Find and discern the appropriate data to determine a realistic assessment

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 Find and discern the appropriate data to determine a realistic assessment of the weighted average cost of capital for a firm of your choosing.

Search for data from several sources, use subjective judgment to determine which data to use or discard, use subjective judgment to determine which calculation gives a more acceptable estimate and make some simplifying assumptions.

Organization of the paper should be as follows: ( I only need 4 through V7)

1.Title page

2. Table of Contents

3. Introduction/Background (2-3 pages)

This section should include background on the company that has been chosen.

4. Pages showing equations with data and brief description

There is no page length given for this as it can vary greatly. This section is to be divided up based on the topics. In each section, you must show and explain the equations that are used. In addition, you are to draw any conclusions on the company you can from this data. Please note that detailed worksheets showing all of the calculations for this section are to be included in an appendix.

·         Cost of Equity (Common Stock)

·         Beta  from Regression and two Betas from analysts  

·         Beta Chosen for  CAPM and why

·         Capital Assets  Pricing Model (include how determined R_F and[ R_M  or (R_M – R_F)]

·         Discounted Cash  Flow (DCF) (only if dividends – include how determined)

·         Own-Bond-Yield-plus-Judgmental-Risk-Premium  (include how determine risk premium)

·         Cost of Preferred Stock

·         Cost of Debt (make sure to include table that lists all bond issues with weighted average cost of debt)

·         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)

·         Market Value of Equity

·         Market Value of Preferred Stock

·         Value of Firm

·          Firm’s Tax Rate (explain how determined)

·         Weight for Equity

·         Weight for Preferred Stock

·         Weight for Debt

·         WACC (Weighted Average Cost of Capital)

5. Assumptions

Including but not limited to R_F , R_M,  RP_M (which - R_F),growth rate of dividends. This page should have a brief description of how you came up with the estimates with spreadsheets, etc. to be put in the appendix.

6. Appendix

Appendix should include all relevant data including debt data from Morningstar, calculations of weighted average cost of debt, stock returns, betas from analysts, beta regression analysis, method/sourcing for R_F and R_M, growth rates for dividends, different methods to determine tax rates, etc. Detailed descriptions, tables of data and excel sheets etc will be in the appendix.

7. References include the website