Reference no: EM132729050

Question 1: Calculate weighted average cost of capital (WACC) for Starbucks Corporation (Ticker:SBUX).

• Use Capital Asset Pricing Model in your analysis for cost of common stock estimate and calculate Beta based on last five year's monthly adjusted close prices. Use S&P returns in your market estimate. You can obtain historical prices on Yahoo Finance.
• Use 10-year US Treasury Bond yield as your risk-free rate (Use the yield on 12/10/2020) and assume the market return as 8%.

Question 2: Calculate total number of shares based on total market capitalization and market price on 12/10/2020. Use the market value of common stock in your calculation.

• Assume Starbucks preferred stock market price as 180 $ and outstanding number of preferred stocks as 250.000.000. Preferred dividend of Starbucks is 7$.
• Assume Starbucks only has long term debt and use the value of debt on the balance sheet for the end of 09/30/2020. Find the interest expense for the same period and use the average interest rate as your cost of debt.
• Use effective tax rate based on tax expense and taxable income on 09/30/2020 income statement.