I am getting an error for my formula for WACC. What am I doing wrong here?
need a clarification from one of the tutors here. I am getting different TOTAL DEBT answer from adding the actual numbers depicting millions vs. shortcut millions (see below). I cannot ask the tutor anymore because my comments were turned off which i dont know why.
Value of Debt = 4696.40
Weight of Debt = 21.16%
Short Term Borrowings = 560
Current Portion of Long Term Debt = 83.5
Long Term Debt = 4052.9
Total Debt = 560 + 83.5 + 4052.9 = 4696.40 million (???)
Source : https://ir.mccormick.com/static-files/689b16f5-2507-4cbe-bddd-3190dbf2b6db
Market Value of Equity = 17500 million
Weight of Debt = 4696.40 / (17500 + 4696.4) = 21.16%
X V fx =141*C142(1-C143)+C144*C145BCEFGHKLMNCalculate the Weighted Average Cost of Capital (WACC) for Mccormick and Company using the formulaWACC = WD RD (1-T) + Ws IS and W, = Value of debt / Value of debt plus value of equity; Ws = Value of Stock Equity / Value of Debt Plus Value of Equity. For ease,the CFO says to use book value of Debt and the market Value of Equity. On February 26, 2019 the market Value of Equity (or Market Cap) in Yahoo was $17.5 billion.Use the 2018 10-K Financial Statements filed January 25, 2019 and look on the Balance sheet to see the total of Short term borrowings, Current portion of long termdebt and Long term debt. Use 4% for the cost of debt. Use 27.5% as the tax rate – a combination of federal and state income tax.05WACC = WD RD (1-T) + Ws rswhere :WD21.60%Wd = weight of debt/ Value of debt / Value of debt plus value of equityRD4%Ws = weight of common stocks27.50%Wp = weight of preferred stocksWS$17500 BillionWd + Ws + Wp = 1RS$400,200,000rD = cost of debtrs = cost of common stocksShort-term borrowings$560,000,000rP = cost of preferred stocksCurrent portion of long te$83,500,000T = tax rateLong term debt,052,900Total debt$647,552,900Outstanding shares132,148,261current price164,980,000Market value of equity17,500,000weight of debt97.37%AY#REF!iInvalid Cell Reference ErrorHelp on this ErrorTrace ErrorIgnore ErrorInstructionsnula Bar+
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