Fin 515 Second Project Wacc Analysis

The weighted average cost of capital for WalmartThe required data for Walmart financial year 2015 obtained from blooberg.com is below (Bloomberg Business, 2015).Year2015LONG TERM DEBT41,696.0TOTAL COMMON EQUITY81,394.0TOTAL EQUITY85,937.0TOTAL LIABILITIES AND EQUITY203,706Weighted average cost of capital as the name implies is the average cost of various sources of funding for the company weighted by their relative significance. The cost is weighted by the relative proportion to the total capital. Capital comes in two forms. One is equity capital which is made up of owners funding to the enterprise and debt capital which is all forms of long term borrowings.AssumptionsThe formula for Weighted Average Cost of Capital calculation isrWACC = (E/E+D) rE + D/ (E+D) rD (1-TC)The formula for the required return on a given equity investment isri= rf + βi * (RMkt-rf)RMkt-rf is the Market Risk Premium. For this project, the Market Risk Premium is 4%. 10-Year Treasury Constant Maturity Rate is used as the risk-free rate. The current risk-free rate is 2.16% (US Department of The Treasury, 2015). Corporate tax rate is 40%.Beta 0.75 is obtained from Yahoo finance under detailed statistics (Yahoo! Finance, 2015)Equity is 85,394 while long term debt is 41,696 therefore Equity plus Debt is 127,090. The