Estimate weighted-average cost of capital

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Estimate the weighted-average cost of capital for Home Depot, Altria, Caterpillar, Intel, and Du Pont. You can estimate the expected stock returns for these companies by using the betas shown on finance.yahoo.com . You can also use Yahoo! Finance to find the relative proportions of equity and debt for each company. Remember, though, to use the market value of the equity, not its book value. Finding the yield on the debt is a little trickier. One possibility it to log on to www.bondsonline.com to find the current level of Treasury yields and the yield spreads (i.e., the extra yield for bonds with different ratings). An alternative is to look at the yields shown in the bonds section of Yahoo! Finance. Note: As we write this, Moody’s ratings for the five companies vary from Baa for Altria, to A for Home Depot, Caterpillar, Intel, and Du Pont.

Reference no: EM131571477

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