Description
I. Search Yahoo Finance, http://www.bloomberg.com or any other credible source to retrieve
the most recent income statement and balance sheet for a major leveraged corporation.
II. Provide these statements in proper format.
III. Also, retrieve the data on the company’s stock annual rate of return for the past 10 years.
IV. In addition, retrieve annual rate of return of a major financial index. Present this data as well.
V. Using the data on company’s stock rate of return and the index’s rate of return estimate beta
of the corporation. Make sure to adjust this value to obtain leveraged beta. Compare this
value with the value stated by the source. Retrieve the risk-free rate of return as the annual
interest rate of US treasuries. Based on these values estimate the expected annual rate of
return of the corporation’s security. Using the financial statements mentioned above estimate
the annual rate of interest paid by the corporation (cost of debt). Also, find the tax rate and
capitalization ratio (proportions among equity and debt). Using these values that you have
found estimate the annual weighted cost of capital (WACC) of the corporation.
VI. Suppose that the corporation is offered an investment which has the following cash flows.
? Based on WACC, Is this investment viable?
? For each part above state the problem before answering the questions, provide clear justifications, explain your work in detail, and cite all references used for development of the content.
Explanation & Answer
Attached.
Running head: FINANCE
1
Dell Technologies
Student’s Name
Institution Affiliation
FINANCE
2
Dell Technologies
Dell is recognised as one of the leading global information technology company that
offers different customers a broad range of computer products and technology services
(Hertenstein, Platt and Veryzer, 2005). Dell has over the years built its reputation through its
ability to listen to its customers and investors and ensure there is correct development of
solutions that meet their individual needs with ease (Hertenstein, Platt and Veryzer, 2005).
Over the years, the company has shifted to ensure it develops products and services that can
provide high-valued and recurring revenue streams over some time. The company primary
intent has been emphasising on the enterprise solutions which entail networking, servers a...