Book Value of Equity $4,711,480 Stock Price 310.11 Market Value of Equity (marke
ID: 2787609 • Letter: B
Question
Book Value of Equity
$4,711,480
Stock Price
310.11
Market Value of Equity (market Capitalization)
52.119B
Number of Shares Outstanding
168.07M
Stock Beta
0.73
3-month T-bill rate
1.06
Cost of Equity (show your calculation)
Risk Free Rate + Stock Beta * Market Risk Premium = 1.06% + 0.73 * 7% = 6.17%
Industry Average Beta
.46
Q4.
Bonds
Book Value
Book Value Weight
Market Value
Market Value Weight
Yield to Maturity
1.
$3 B
$2.6 B
4.35%
2.
$1 B
$0.92 B
3.92%
3.
$2 B
$2.14 B
2.25%
4.
$2 B
1.86 B
2.86%
Book Value of Equity
$4,711,480
Stock Price
310.11
Market Value of Equity (market Capitalization)
52.119B
Number of Shares Outstanding
168.07M
Stock Beta
0.73
3-month T-bill rate
1.06
Cost of Equity (show your calculation)
Risk Free Rate + Stock Beta * Market Risk Premium = 1.06% + 0.73 * 7% = 6.17%
Industry Average Beta
.46
Explanation / Answer
In order to calculate weights, we need to sum up the values and different each value by the total
For Book Value, Total = 3 + 1 + 2 + 2 = $8 B
Book Weight of Bond 1 = 3 / 8 = 37.50% and so on for other bonds
For Market Value, Total = 2.6 + 0.92 + 2.14 + 1.86 = 7.52
Market Weight of Bond 1 = 2.6 / 7.52 = 34.57% and so on..
Bonds Book Value Weight Market Value Weight 1 3 37.50% 2.6 34.57% 2 1 12.50% 0.92 12.23% 3 2 25.00% 2.14 28.46% 4 2 25.00% 1.86 24.73% Total 8 7.52