Question

Consider the following financial data.

US 10-Year T-Bond Yield = 2.45%

Market Risk Premium = 6.25%

Tax Rate = 21%

Also the following data for Ford Motor Company:

Stock Price = $10.38

Market Cap = $41.412B

Beta = .91

Moodys = A1 (115 basis points)

Total Debt = $157.16B

Number of Shares Outstanding = 3.92 B

Diluted EPS = $.92

Return on Assets = 1.02%

Total Debt/Equity (Book Value) = 429.76

Book Value/share = $9.12 Revenues = $158.72B

Calculate the Cost of Capital for Ford Motor Company. Using the Ford Motor Company financial profile information (refer to question above) calculate the MVA for Ford

7.19%

7.88%

3.95%

3.60%

10.57%

Using the Ford Motor Company financial profile information (refer to question above) calculate the MVA for Ford

$87.94B

$75.02.B

$4.94B

$12.68B

$111.61 B

Answer 1

ANSWer debt dee capital wesght of Cost Of Of Cost euirey) weight of eruity cost af debt manket Value of debt dett ( maiked Value oF weiaht of moorked Value of euty delt ST.16 llion mastec value of eurty Of 41.418 billion tmasked Value dett /1S1.16 bilton + 157. 16 billion weight of 41,HI bl10n S7.16 billon + wetght of euity H1, MI2 brllion bilton 0,91 4.MIa Jebt preroton) COST of sk faee ate maked s - tarrate) -(.45 (1 +6.850 u8-Dx(1 = 6,87%

enufty Cost of eceot Yiel d Poice of Stock 3.26/ 10, 38 (o.21 8.86)- 7.21% Lom6.87) ca ptal of COst book value of euutty masket value of euity MVA bookvalue peo share number bcok Value of eutty OF shenes autstanding billion = 9,12 3 .9 2 35.75O4 BIllion 35.7S0H billion 5,661,600 HI.4/2 bill:on MVA