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Identifying the Cost of Equity for Apple using CAPM and Detecting the Weighted Average Cost of Debt

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Added on  2023-04-10

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This document provides a detailed analysis of identifying the cost of equity for Apple using CAPM and detecting the weighted average cost of debt. It includes calculations and explanations of the process. The document also discusses the conclusion and limitation of the estimation. The subject is Finance and the document type is an assignment.

Identifying the Cost of Equity for Apple using CAPM and Detecting the Weighted Average Cost of Debt

   Added on 2023-04-10

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Running head: FINANCE
Finance
Name of the Student
Name of the University
Author Note
Identifying the Cost of Equity for Apple using CAPM and Detecting the Weighted Average Cost of Debt_1
1FINANCE
Table of Contents
1. Identifying the cost of equity for apple using CAPM and detecting the weighted average
cost of debt:................................................................................................................................2
2. Background and objective of the project:..............................................................................2
3. Presenting the detailed analysis and calculations:.................................................................2
4. Conclusion and limitation of the estimation:.........................................................................3
References:.................................................................................................................................5
Appendices:................................................................................................................................6
Identifying the Cost of Equity for Apple using CAPM and Detecting the Weighted Average Cost of Debt_2
2FINANCE
1. Identifying the cost of equity for apple using CAPM and detecting the weighted
average cost of debt:
The book value of long-term debt is mainly at the levels of $104,193,000. On the
other hand, the book value of fixed rate notes is at the levels of $96,086,000,000. In addition,
the current stock price of Apple is mainly detected at the levels of $186.53, while the total
market capitalization is at $879,541,000,000 and the recent annual dividend is at $2.82
(Sec.gov, 2019). Apple Inc has paid dividends 31 times on an annual basis from 1988 to 2019
(Apple.com, 2019). No, we cannot use dividend discount model in this case, as no growth
estimation and WACC of the company is provided. Moreover, we have to use CAPM for
deriving the cost of equity for Apple Inc, where 13-week treasury bill is used in the
calculation. The weighted average method is used for calculating the total cost of debt for the
fixed rate bonds of Apple Inc.
2. Background and objective of the project:
Robert Computer, Inc. is one of the successful privately-owned organisations, who
operates in retail business of computers. The company has been generating high level of
income over the period, which is invested in buying new stores. Therefore, the company’s
current cost of capital is hard to determine, as the organisation is privately owned. Hence,
Apple Inc. data has been used for detecting the accurate level of cost of capital, which can
help in understanding the capital budgeting requirements. The pure play approach is used for
determining the cost of capital for Robert Computer, Inc.
Identifying the Cost of Equity for Apple using CAPM and Detecting the Weighted Average Cost of Debt_3

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