Reference no: EM132596919
According to its annual report, as of January 31, 2012, Target's borrowing costs averaged 4.6 percent, and its tax rate was 34.27 percent. A research report estimated Target's cost of capital at 10.5 percent. The firm had interest-bearing debt of $17,483 million. Moreover, Target's stock was trading at $50.81 per share, and there were 679.1 million shares outstanding. Now, let's assume Target's amount of debt is also a market value estimate of the debt. Let's also assume the current debt and equity values are at Target's optimal capital structure.
Question 1: Based on market value estimates, what is Target's cost of capital?
Walmart: estimated weight of debt (Wd) of 0.20 ($53,427/$265,753)
estimated weight of equity (We) of 0.80 ($212,306/$265,753)
Question 2: Calculate Walmart's estimated overall weighted-average cost of capital (WACC)
Question 3: How does Target's cost of capital compare to Walmart's? What explains the difference?
|
Record the journal entry to reflect the expiration
: Assuming that all compensation expense has been recorded, record the journal entry to reflect the expiration of 3,000 options that were never exercised
|
|
Find target return on invested capital or roic
: For the fiscal year ending January 31, 2012, Estimate Target return on invested capital or ROIC. Compare it with Walmart's. Are you surprised at the difference?
|
|
Write up the equipment account and provision
: Installation costs amounted to RM8,600. Write up the equipment account and provision for depreciation account for the year 2007 to 2010
|
|
What was cash collections for the year
: $248,000 of accounts was written off during the year. The bad debt expense for the year was $250,000. What was cash collections for the year?
|
|
Calculate walmart estimated overall weighted-average cost
: How does Target's cost of capital compare to Walmart's? What explains the difference?Calculate Walmart's estimated overall weighted-average cost
|
|
Report the outcomes of a debriefing
: How may you have to document or report the outcomes of a debriefing?
|
|
Database pioneer rethinks the best way to organize data
: Is there a better way to build a data warehouse? For years, relational databases, which organize data in tables composed of vertical
|
|
How do credit analysts determine the risk-free rate
: How do credit analysts determine the risk-free rate? The weighted-average corporate yield based on the preceding four quarters
|
|
Prepare the accounts for insurance
: Required - Prepare the accounts for insurance, wages, rent revenues and commission revenues for the year ending 31st December 2009
|