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Pages:
1 page/≈550 words
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Level:
APA
Subject:
Accounting, Finance, SPSS
Type:
Math Problem
Language:
English (U.S.)
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MS Word
Date:
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Topic:

Math Problem: Calculation Weighted Avarage Cost Of Capital (Math Problem Sample)

Instructions:

the task involved calculating of wacc of the company given a set of information

source..
Content:
Student’s Name
Professor’s Name
Course
Date
WACC Calculation
To solve the question of WACC for Oshkosh Corporation I am taking monthly data for 24 months for the company from January 2014 to December 2015.
To determine the cost of equity, I will adopt the CAPM model where the cost of equity is given by;
Ke= risk free rate + beta*risk premium
For Oshkosh the risk free rate is equivalent to the returns on a 10 year treasury stocks on 31 December 2015, which was 2.27%
Using regression analysis from the 48-montsh provided on the returns of Oshkosh Corporation and S&P the beta value for the company is 1.4348
While the market risk premium for the company is 4.5%. Arguably this estimated was from the past data for risky evaluation in the U.S.
Substituting these values into the equation;
Ke = 2.27% +1.4348(4.5%)
Ke = 8.726%
* Based on the def...
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