Business Finance

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Business Finance

See attached 

Instructions

INSTRUCTIONS
Complete the Cost of Capital tab
o   Find the cost of Equity using the Capital Asset 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
o   Complete the questions on the tab
Complete the Budget Projections tab
o   Revenue increases 4% annually
o   Expense increases 2¾% 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 êžµ RM = CAPM
————————————–
2
E
D
Total Capital (V) $ – 0
Last Fiscal Year End Interest Expense
Tax Rate (TC)
1. Find the weight of equity = E / (E + D).
2. Find the weight of debt = D / (E + D).
Re 3. Find the cost of equity using CAPM.
Rd 4. Find the cost of debt.
WACC 5. Find the weighted average cost of capital.

WACC Information from Largo Global
a. As of today, Largo Global market capitalization (E) is $6,373,341,000.1
b. Largo Global’s Market value of debt is $761,000,000.
c. Cost of Equity = CAPM from question 1
d. Cost of Debt = Last Fiscal Year End Interest Expense2 / Market 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

Business Finance See attached  Instructions INSTRUCTIONS Complete the Cost of Capital tab o   Find the cost of Equity using the Capital Asset 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 o   Complete the questions on the tab Complete the Budget Projections tab o   Revenue increases 4% annually o   Expense increases 2¾% 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 êžµ RM = CAPM ————————————– 2 E D Total Capital (V) $ – 0 Last Fiscal Year End Interest Expense Tax Rate (TC) 1. Find the weight of equity = E / (E + D). 2. Find the weight of debt = D / (E + D). Re 3. Find the cost of equity using CAPM. Rd 4. Find the cost of debt. WACC 5. Find the weighted average cost of capital. WACC Information from Largo Global a. As of today, Largo Global market capitalization (E) is $6,373,341,000.1 b. Largo Global’s Market value of debt is $761,000,000. c. Cost of Equity = CAPM from question 1 d. Cost of Debt = Last Fiscal Year End Interest Expense2 / Market 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

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