Estimate Cost of Capital For Walmart
Estimate Cost of Capital For Walmart
Estimate Cost of Capital For Walmart
Cost of Capital
Cost of Debt
Component 2019 2018
Long Term Debt & Capital 50,203 36,825 =>Using Dividend growth model ,
Interest Expense 2,129 2,178 Growth rate =11.75 (from 2007 to 2019)
Tax Expense 4281 4600 Ke={2.08(1+.1175)/102.20}+.1175=14.02%
PAT 11,460 15,123
Effective Tax Rate 37.36% 30.42%
Average Debt 43,514 The debt portion is 37% (from avg of the last two years)
Average Tax Expense 4440.5
Average Tax Rate 33.89% Hence, the portion funded by Equity = (1-0.37) = 0.63
Average Interest Expense 2153.5
Kd 3.27%
We calculate the WACC to find the WACC