Estimates against the effective tax rate shown by reuters

Assignment Help Financial Management
Reference no: EM131179782

For WalMart do the following using financial information?

Tax rate:

Using the income before taxes and income taxes paid, estimate the tax rate for the years that you have information available. Tax rates are supposed to be around 35%. Compare your estimates against the Effective Tax rate shown by Reuters. Discard any numbers that appear to be out of place and decide on the number you’ll use for the Cost of Capital estimation. You can consider taking average of the TTM rate shown in Reuters and your own estimate for the last year.

Cost of capital using book values:

You will use the book value of equity and the book value of long term debt to calculate the book value of the firm. Do not consider short term liabilities and you can ignore other long term liabilities. To apply the Capital Asset Pricing Model you will get a recent quote of 10 year Treasury bond rate and will use it as your Rrf. For the Market Risk Premium you can use any number between 5 and 7 percent. Personally I recommend 5.5%. For your beta you will use the average of the 4 estimates you got.

Cost of capital using market values:

 

You will use the market value of equity and the book value of long term debt that you used in the previous step and recalculate the Cost of Capital using market weights instead of book weights. Compare the two estimates and comment on the differences.

Reference no: EM131179782

Questions Cloud

How these different notions of the moral good lead : In your second reply, you should identify the notion of the moral good in virtue ethics and compare and discuss that to the account of utilitarianism in Starbucks presented in your fellow student's post. Analyze how these different notions of the ..
Important for hr management to transform : Why do you think it is important for HR Management to transform from being primarily administrative and operational to becoming a more strategic contributor in organizations?
Shares of preferred stock outstanding which pay dividend : XYZ corp. currently has 50 million shares of common stock outstanding. Their current market price is $80 per share and have a beta of 1.15. XYZ has $1 billion of bonds outstanding, each with the market value of $1100. It is known that the yield to ma..
What was farah''s average speed in m/sec : Mo Farah won the 10,000-meter race in the 2012 Olympics with an official time of 27 minutes, 30.42 s. To the correct number of significant figures, what was Farah's average speed in m/sec ?
Estimates against the effective tax rate shown by reuters : Using the income before taxes and income taxes paid, estimate the tax rate for the years that you have information available. Tax rates are supposed to be around 35%. Compare your estimates against the Effective Tax rate shown by Reuters. You will us..
Purpose and advantages of conducting a needs assessment : Describe the purpose and advantages of conducting a needs assessment. How does your organization determine training needs?
Traveling to the country in terms of both work and leisure : Identify and briefly describe physical features. - Identify and briefly describe climate and typical weather patterns- Identify and briefly describe culture and items to know about the population.
Price of put option with the same strike price and maturity : A stock is currently selling at $60. Over each of the next two six month periods, the stock may move up to a factor 1.15 or down by a factor of 0.85 each period. A call option with strike price of $59 and a maturity of one year is available. Find the..
What conditions are peace operations likely to be successful : Questions are often raised about the effectiveness of the United Nations in conflict resolution and peace operations. Under what conditions are peace operations likely to be successful?

Reviews

Write a Review

Financial Management Questions & Answers

  The average accounts receivable balance

ABC Company has annual sales of $180,043 and cost of goods sold of $44,437. The average accounts receivable balance is $13,627. How many days on average does it take the firm to collect its accounts receivable? That is, what is the AR Period? Assume ..

  What is the market value of common stock

Ms. Manners Catering (MMC) has paid a constant $4.79 per share dividend to its common stockholders for the past 12 years. MMC expects to continue this policy for the nest two years, and then begin to increase the dividend at a constant rate equal to ..

  Repurchasing all of the outstanding shares

ACME is a very cyclical type of business which is reflected in its dividend policy. The firm pays a $2.00 a share dividend every other year. The last dividend was paid last year. Five years from now, the company is repurchasing all of the outstanding..

  Which type of options should be used-puts or calls

How could Global use options to hedge this risk? Which type of options should be used-puts or calls? Set up a hedge using the futures market for silver that will protect Global against increases in the price of silver over the coming 6 months.

  Earn rate of return equal

How much would you be willing to pay (rounded to the nearest dollar) for a 20-year annuity due if the payments are $4,500 per year and you want to earn a rate of return equal to 5.5% per year?

  What is the new divisor for the price-weighted index

Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $47, $312, and $88, respectively. If Baker undergoes a 2-for-1 stock split, what is the new divisor for the price-weighted index?

  Liability coverage under business auto policy would cover

Liability coverage under a business auto policy would cover: Select one: a. injuries to a fellow employee caused an employee driving a company car. b. damage to a fellow employee's personal car caused by an employee driving a company car. c. damage t..

  Specializes in electronic systems that read fingerprints

Fingerprint Cards is a software development company that specializes in electronic systems that read fingerprints. You have read a lot about the company on various online forums over the past year and therefore you are considering whether it can be a..

  Evaluating bfsi entry in the proposed foreign markets

Identify the key criteria and considerations that need to be taken into account in evaluating BFSI entry in the proposed foreign markets.

  What is the current market value of its equity

Acort Industries owns assets that will have an 80% probability of having a market value of $50 million in one year. There is a 20% chance that the assets will be worth only $20 million. The current risk-free rate is 5%, and Acort’s assets have a cost..

  Impact would that have on your federal income tax liability

You just won the lottery and want to give some money to a good cause. Because you have enjoyed this class so much, especially the tests, you decide to give $10,000 to HCC to fund student scholarships. HCC is a non-profit educational institution. What..

  Effective annual return on its consumer loans

Magnus Credit Corp. wants to earn an effective annual return on its consumer loans of 16.25 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd