Financial Excel Solution - Stans.xlsx - CAPM Calculating...

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CAPM Calculating Expecting Return of Security bases on its systematic risk Using CAPM Risk Free Rate 1% Market Risk Premium 6% Beta 0.4 Expected Return of Equity 3 1 + 0.4 (6-1) Expected cost of Debt 3.25 (2.25+1) Now, We will calculate the WACC The Formula for Calculating WACC is WACC = E/V * Re + D/V * Rd * (1 - Tc) WACC Dollar Value Method Equity ($) $63 Debt ($) $50 Cost of Equity 3.00% Cost of Debt 3.25% Tax Rate 21.00% WACC 2.81%
Bond A BOND B Face Value $ 1,000 $ 1,000 Coupon Rate 8% 6% Years to Maturity 20 20 YTM 7% 7% PV Of Bond $ -901.82 $ -1,114.70
9% $ -0.05
A Economy Idaho Slopes Dakota Steppes Strong Downturn -10% 2% Mild Downturn -4% 7% Slow Growth 4% 6% Moderate Growth 12% 4% Strong Growth 20% 4% Sum of All Economies 22% 23% Number of Type of E 5 5 4.40% 4.60% B IS DS Economy Strong Downturn -14.40% 2.07% -2.60% 0.07% Mild Downturn -8.40% 0.71% 2.40% 0.06% Slow Growth -0.40% 0.0% 1.40% 0.02% Moderate Growth 7.60% 0.58% -0.60% 0.00% Strong Growth 15.60% 2.43% -0.60% 0.00% Sum or Variance 5.79% 0.15% Economy a*b Strong Downturn -14.40% -2.60% 0.37% Mild Downturn -8.40% 2.40% -0.20% Slow Growth -0.40% 1.40% -0.01% Moderate Growth 7.60% -0.60% -0.05% Strong Growth 15.60% -0.60% -0.09% Sum or Variance 0.03% Cov(IS,DS) 0.01% Economy a*b a^2 b^2 Strong Downturn -14.40% -2.60% 0.37% 2.07% 0.07% Mild Downturn -8.40% 2.40% -0.20% 0.71% 0.06% Slow Growth -0.40% 1.40% -0.01% 0.00% 0.02% Moderate Growth 7.60% -0.60% -0.05% 0.58% 0.00%

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