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 …

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