Weighted average cost of capital.

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5.  Calculate Google's Weighted Average Cost of Capital.
a. , Use the 10-year Treasury from Yahoo Finance as the risk-free rate in the CAPM model Assume that the market risk premium (RM - RF) is 8%. When calculating after-tax cost of debt assume a tax rate of 40%.
b. Demonstrate clearly how you arrived at each component cost and how you arrived at the appropriate weight (using the firm's Market Value) used for each component. Check your answer. Cost of equity should be higher than the cost of debt due to risk.


6.  Examine transactions with the Googles capital providers over the past three years.
a. Has your Google undergone any major restructuring in the past three years eg a stock repurchase, bond refunding, etc? If so, discuss the implications.
b. In terms of rewards to shareholders, how has Google chosen to distribute benefits?
i. Does your Google pay regular cash dividends? What is the current dividend yield?
ii. Alternatively, has Google initiated stock repurchase plans for shareholders?

Reference no: EM13542664

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