Scribd Logo
Upload

Welcome to Scribd!

  • 461 views

    Apple Wacc

    Uploaded by

    Maira Ahmad
    Apple Inc designs, manufactures, and markets mobile devices, computers, and portable music players. It sells iPhones, iPads, Macs, iPods, Apple TV, software, and digital content through retail stores, online stores, and third parties. Apple also provides services and accessories and delivers digital content through iTunes and app stores. It distributes its products worldwide and generates over $600 billion in market capitalization.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd

    Apple Wacc

    Uploaded by

    Maira Ahmad
    461 views3 pages
    Apple Inc designs, manufactures, and markets mobile devices, computers, and portable music players. It sells iPhones, iPads, Macs, iPods, Apple TV, software, and digital content through retail stores, online stores, and third parties. Apple also provides services and accessories and delivers digital content through iTunes and app stores. It distributes its products worldwide and generates over $600 billion in market capitalization.

    Original Description:

    Apple wacc

    Copyright

    © © All Rights Reserved

    Available Formats

    DOC, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Apple Inc designs, manufactures, and markets mobile devices, computers, and portable music players. It sells iPhones, iPads, Macs, iPods, Apple TV, software, and digital content through retail stores, online stores, and third parties. Apple also provides services and accessories and delivers digital content through iTunes and app stores. It distributes its products worldwide and generates over $600 billion in market capitalization.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    461 views3 pages

    Apple Wacc

    Uploaded by

    Maira Ahmad
    Apple Inc designs, manufactures, and markets mobile devices, computers, and portable music players. It sells iPhones, iPads, Macs, iPods, Apple TV, software, and digital content through retail stores, online stores, and third parties. Apple also provides services and accessories and delivers digital content through iTunes and app stores. It distributes its products worldwide and generates over $600 billion in market capitalization.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 3
    At a glance
    Powered by AI
    Apple designs, manufactures and markets mobile devices, personal computers, software and online services. It also delivers digital content through various online stores.

    Apple's main products and services include the iPhone, iPad, Mac computers, iPod, Apple TV, software applications, operating systems, iCloud, accessories and digital content through iTunes Store, App Store, iBookstore and Mac App Store.

    Some key financial metrics for Apple are net profit margin of 20-21%, return on assets of 15-18%, return on equity of 29-34% and total market value of equity of around $601 billion.

    Apple Inc (AAPL)

    Apple Inc. (Apple) designs, manufactures and markets mobile communication and media
    devices, personal computers, and portable digital music players, and a variety of related
    software, services, peripherals, networking solutions, and third-party digital content and
    applications. The Company's products and services include iPhone, iPad, Mac, iPod,
    Apple TV, a portfolio of consumer and professional software applications, the iOS and
    OS X operating systems, iCloud, and a variety of accessory, service and support
    offerings. The Company also delivers digital content and applications through the iTunes
    Store, App StoreSM, iBookstoreSM, and Mac App Store. The Company distributes its
    products worldwide through its retail stores, online stores, and direct sales force, as well
    as through third-party cellular network carriers, wholesalers, retailers, and value-added
    resellers.

    Information on Equity

    102.99
    +0.52 (0.51%)
    After Hours: 103.13 +0.14 (0.14%)
    Oct 22, 7:59PM EDT
    NASDAQ real-time data
    Currency in USD
    Range 102.60 – 104.11
    52 week 70.51 - 104.11
    Open 102.84
    Vol/Avg 68.26M/64.08M
    Mkt cap 601.11B
    P/E 16.02

    Div/yield 0.47/1.83
    EPS 6.43
    Shares 5.87B
    Beta 0.89
    Inst. Own 63%
    Q3 (Sep ’14) 2014
    Net profit margin 20.10% 21.61%
    Return on average assets 14.95% 18.01%
    Return on average equity 29.22% 33.61%

    Info extracted on 23rd Oct 2014 from https://www.google.com/finance?q=NASDAQ


    %3AAAPL&ei=UHpIVKihNsKwkQWr3IGYAw

    Information on Debt
    Morningstar Credit Rating
    AA-

    NAME MATURITY DATE AMOUNT $ (MIL) PRICE (% of PAR)


    Apple 0.45% 05/03/2016 1,500.0 100.2
    Apple 1.05% 05/05/2017 1,500.0 100.5
    Apple 1% 05/03/2018 4,000.0 98.8
    Apple 2.1% 05/06/2019 2,000.0 101.5
    Apple 2.85% 05/06/2021 3,000.0 102.5
    Apple 2.4% 05/03/2023 5,500.0 97.0
    Apple 3.45% 05/06/2024 2,500.0 104.7
    Apple 4.45% 05/06/2044 1,000.0 105.0
    Apple 3.85% 05/04/2043 3,000.0 94.9

    Info extracted on 23rd Oct 2014 from


    http://quicktake.morningstar.com/stocknet/bonds.aspx?symbol=aapl

    United States Treasury Yields


    US TREASURY YIELDS
    Tenor Coupon Price Last

    3 Month 0.0000 0.0150 0.02%

    6 Month 0.0000 0.0850 0.09%

    12 Month 0.0000 0.1850 0.19%

    2 Year 0.5000 99-29½ 0.54%

    5 Year 1.5000 99-29¾ 1.51%

    10 Year 2.2500 101-15 2.09%

    Retrieved on 13/12/2014 at http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

    QUESTION 1

    2
    Assuming tax rate is 35% and equity premium of 5.43% 1, determine the following based on the
    equity and debt information for Apple:

    i. Cost of equity (3 marks)

    ii. Cost of debt (4 Marks)

    COUPON Price MV YTM Apple


    # of Bond Weightage
    ($) ($) ($) (%) Cost debt

    $4.5

    10.5

    10

    21

    28.5

    24

    34.5

    44.5

    38.5

    TMV = Total rd =

    (hint: APPLE bonds all in Billion amount)

    iii. Total market value of equity (2 Marks)

    iv. Total market value of debt (3 Marks)

    v. Market Value WACC (Weighted average cost of capital) (3 Marks)

    1
    Implied ERP on October 1, 2014= 5.43% (Trailing 12 month cash yield); extracted from
    http://pages.stern.nyu.edu/~adamodar/

    You might also like