Determine the cost of debt and equity

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Reference no: EM133369094

Question: Use the company Lockheed Martin1 to determine the Weighted Average Cost of Capital. Using the principles and tools outlined in the textbook, form an estimate of the WACC for the firm.

Determine the cost of debt: Using information from the firm's website, annual report, and the Stafford Library's database sources, determine the 'average' rating of your firm's bonds and the current YTM on a composite of these bonds. Based on this information, estimate the current cost of debt for the firm. Explain the approach and procedure you used to make your determination and what this number means.
Determine the cost of equity: Determine the required rate of return for your firm using the CAPM. Explain the approach and procedure you used (and justification for the sources of inputs used for your model) to make your determination and the meaning of this required rate of return.
Determine the capital structure of the firm: Determine the market value of the firm's debt and equity. Explain the approach and procedure you used and use these values to determine the weights for the WACC.

Reference no: EM133369094

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