2. Then determine the cost of debt, cost of preferred stock, cost of common equi
ID: 2617614 • Letter: 2
Question
2. Then determine the cost of debt, cost of preferred stock, cost of common equity, capital structure, and the weighted average cost of capital (WACC) for your assigned publicly-traded company for Exxon Mobil (XOM)
3. Develop this (item #2) into a PowerPoint where you explain how you calculated those numbers (if you want to include an Excel spreadsheet along with the PowerPoint , that is fine. ) and what was your reasoning.
Show Income Statement Balance Sheet Cash Flow AnnualQuarterly Income Statement All numbers in thousands Revenue 12/31/2017 237,162,000 162,345,000 74,817,000 12/31/2016 200,628,000 136,098,000 64,530,000 12/31/2015 239,854,000 165,590,000 74,264,000 Total Revenue Cost of Revenue Gross Profit Operating Expenses Research Development Selling General and Administrative Non Recurring Others 41,060,000 1,790,000 19,893,000 39,819,000 1,467,000 22,308,000 41,810,000 1,523,000 18,048,000 Total Operating Expenses Operating Income or Loss 12,074,000 936,000 12,883,000Explanation / Answer
Answer A) Here , from the given detailed dat about the financial position of company ,
cost of preferred stock = 0 , as preferred stock were not used by company till now
cost of common equity = Income incomeapplicable to common equity / Common equity value
= 19710000 / 187688000 = 10.50 %
Cost of Debt = Interest cost / total debt =601000/ 23079000 =2.60%
Capital structure
total capital = Equity + debt =187688000 + 23079000 = $ 210767000
DEbt % = 10.95%
Equity % = 89.05%
WACC = WE VE + WD VD = 0.1095 * 2.60 + 0.8905 * 10.50 = 9.635% .
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