Free Book Report On Alchemist Essay

# Free Book Report On Alchemist Essay

… Starbucks Inc, Valuation Models

Weighted Cost of Capital (WACC)

The Weighted Average Cost fo Capital is calculated using the following formula:
WACC = wdkd(1-T) + wsks

The variables for this formula are calculated as follows:
wd = Book Value of Debt / [Market Value of Equity + Book Value of Debt]
The book value of debt is calculated by adding up the total of all the debt on the balance sheet. The market value of equity is the Market Cap, and equals the number of (common) shares outstanding multiplied by the price/share. The variable ks represents the cost of common equity. …

… corporate tax rate ( T ) for Starbucks is 37.3%. These number were obtained from the Starbucks Website and are contained the 2001 Annual Report. To calculate WACC we simply plug in the numbers:
wd = \$38,650,000,000 / [\$9,291,996,469+\$38,650,000,000]
wd = 0.806
WACC = (0.801)(.05528)(1-.373)+(1-0.806)
WACC = (.044)( .627 )+(.194)
WACC = 0.22 = 22%
Capital Asset Pricing Model
Risk Free Rate on 30 Year Treasury Bonds as of December 2001 (RF) 5.08 %
Beta (B) 0.94
Market Risk (S & P since 1947) (RM) 8.2 …