This assignment consists of two parts. The first part is an excel workbook with calculations. Complete the Cost of Capital tab o Find the cost of Equity using the Capital Asse Pricing Model (CAPM) o...

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Answered 8 days AfterNov 21, 2021

Answer To: This assignment consists of two parts. The first part is an excel workbook with calculations....

Nitish Lath answered on Nov 30 2021
135 Votes
Project 5 Excel Workbook
Instructions
    INSTRUCTIONS
        Complete the Cost of Capital tab
        o   Find the cost of Equity using the Capital Asse Pricing Model (CAPM)
        o   Find the
Weighted Average Cost of Capital (WACC)
        Complete the Payback tab
        o   Complete the After-tax Cash Flow re-evaluation table
        o   Complete the DCF Payback timeline
        Complete the Budget Projections tab
        o   Revenue increases 5% annually
        o   Expense increases 2% annually
Cost of Capital
    Instructions:
        1    Find the cost of Equity using the Capital Asset Pricing Model (CAPM)
        2    Find the Weighted Average Cost of Equity (WACC)
    1
        RF    1.28%    ꞵ    1.12    RM    4.72%     = CAPM        6.57%
    --------------------------------------
    2
                                    E            $ 5,681,981,200
                                    D            $ 539,500,000
                                    Total Capital (V)            $ 6,221,481,200
                                    Last Fiscal Year End Interest Expense            $6,905,600
                                    Tax Rate (TC)            21.000%
            1. Find the weight of equity = E / (E + D).                             91.328%
            2. Find the weight of debt = D / (E + D).                             8.672%
        Re    3. Find the cost of equity using CAPM.                            6.57%
        Rd    4. Find the cost of debt.                            1.011%
        WACC    5. Find the weighted average cost of capital.                            6.08%
WACC Information from Largo Global
a. As of today, Largo Global market capitalization (E) is $5,681,981,200.1
b. Largo Global's book value of debt is $539,500,000.2
c. Cost of Equity = CAPM from question 1
d. Cost of Debt = Last Fiscal Year End Interest Expense3 / Book Value of Debt (D).
e. Use the tax rates given in Project 4 Tab 3.
_________
1 Market value of equity (E), also known as market cap, is calculated using the following equation:
    Market Cap = Share Price x Shares Outstanding from Project 1
2 Book value of debt (D) is calculated as follows: Book Value of Debt...
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