Procter & Gamble WACC Analysis
Added on 20190916
2 Pages739 Words327 Views



The company: "Procter and Gamble Company” this is a real world example, so you need to show where you got the numbers fromUsing the 2015 balance sheet and 10k report find the following:WACC Project Checklist:1.Determine the firm’s rd from the 10K report in the Note to the Longterm Debt, where rd = ∑(wdi*rdi), where wdi = the weight of debt for each bond andrdi is the coupon rate for each bond. Please regard equation 6.6 on page 247 for a review of the methodology.2.Construct the capital structure of the firm to find the wd and we components of the WACC. Note that the dollar amount of longterm debt and the dollar amount of total equity should be utilized. Preferred equity dollar amount should be included in the calculation if the firm still has preferred equity outstanding.3.Find the firm’s beta.4.Determine the firm’s tax rate from the 10K information. Please make sure to include the page number where you determined the firm’s tax rate in the 10K report from the previous fiscal year.5.Find either the 1year Treasury bill rate or the 10year Treasury note rate at the close of the firm’s fiscal year. If the riskfree rate is provided by the firm in the10K, please utilize this percentage. Full credit will not be earned if the 4% rfr in the givens in the instructions is utilized. 6.Find an appropriate rm percentage for the previous fiscal year. Full credit will not be earned if the 8% rpm given in the instructions is utilized. 7.Construct the current CAPM rs for the firm. Please review page 258, equation 6.14.8.Construct the current WACC for the firm. Please review page 375, equation 9.2. Note that you do not have to utilize the shortterm debt portion in the equation.9.Calculate the beta unlevered. Please review page 611, equation 1510.10.Calculate the new beta levered at plus or minus 5% or 10% intervals of wd in the firm’s capital structure. Please review page 611, equation 15.9a.
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents