WACC Cost of Capital for Goff Computers Essay

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WACC

Cost of Capital for Goff Computers

The 10Q book value debt for Dell was $6,430,000,000. The 10Q book value equity for Dell was $8,663,000,000. The 10K book value debt for Dell was $5,146,000,000. The 10K book value equity for Dell was $7,766,000,000.

What is the most recent stock price listed for Dell?

What is the market value of equity, or market capitalization? 30.95B

How many shares of stock does Dell have outstanding? 18,703,176 What is the beta for Dell?

What is the yield on 3-month Treasury bills? .03

Using a 7% market risk premium, what is the cost of equity for Dell using the CAPM?

Kc = Rf + beta (Km -- Rf)

Kc = .03 + 1.

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26(7 - .03) = 6.99

Dell's Competitors and Beta:

Apple Inc.

Hewlette-Packard Company

Acer Inc.: .92

Toshiba Corporation

Sony Corporation

Lenovo Group Limited

International Business Machines Corp: .67

Samsung Electronics: .54

EMC Corp

Industry Average

Kc = 7.98

It does matter, because the industry average is higher and most likely more accurate….....

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