I need to calculate the WACC for TJX companies. I need to show all work. Startin

Question

I need to calculate the WACC for TJX companies. I need to show all work. Starting from the equation Rwacc = WbRb[1-tax (using both .00 and .30)+Ws+Rs Wb=MVb/MVb+MVs Ws=MVs/MVb+MVs R_(WACC )= [?MV?_B/(?MV?_B ?+MV?_S ) R_f+DRP][1-tax]+?MV?_B/(?MV?_B ?+MV?_S ) R_f+?[MRP] He suggested we use the websites bloomberg.com finra and yahoo finanace to get the information but I am so lost and am not even understanding the equation itself and what the numbers mean and how they are found. Can someone do this out for me we are using 10 year rate of governement bonds matuarity of 2020-2026 try to find the coupon rate to the one that matches closest to the yeild. I need very detailed directions not just an answer. Thanks so much!

Explanation / Answer

WACC = Cost of Debt * Percentage of Debt * ( 1- tax rate) + Cost of Equity *Percentage of Equity ;

Capital = Debt + Equity ;

Percentage of Debt = Debt/Capital Ratio

Percentage of Equity = Equity / Capital Ratio = 1 - Debt ratio ;

Cost of Equity = Expected rate of return on equity ;

Expected Rate of return = Risk free rate (Rf) + beta * ( Market rate (Rm) - Risk Free Rate (Rf) ) ;

Tax rate = as given (usually 30% = 0.3) ;

Cost of Debt = as given ;

in your case i guess bonds and securities are involved ;

debt is synonymous to bonds and securities is synonymous to Equity ;

so % debt = Bonds/ (Bonds + Securities)

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.