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In: Finance

Apple has asked you to estimate the WACC for their company. You have collected the following...

Apple has asked you to estimate the WACC for their company. You have collected the following information:

  • The return on risk-free US Government Bonds is 2.5% per year

  • Apple has 1,000,000 shares outstanding and its shares are currently trading at $5.50 per

    share.

  • Beta of Apple shares is 1.3, and the expected return on the market is 10.5%.

  • Apple has 8 million preference shares outstanding at a current price of $11 per share. Preference shares pay a constant dividend of 70 cents per year.

  • Apple also has $350 million in bank loans. These loans have a variable interest rate which is currently 4.5% compounded annually.

  • The company faces a 30% corporate tax rate. Compute the WACC for Apple

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jeff jeffy answered 1 year ago
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