Financial Week 6

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Week 6 project Identify and evaluate sources of debt financing A company's debt, liabilities and risk are very important factors in understanding the company. Boeing Company's total debt has increased over the past five years. The company reported a five-year low of $7.512 billion in 2008 and a five-year high in 2009 at $12.924 billion. The company's 2011 reported total debt of $12.371 billion is an increase of 50.55% over 2007. Debt Ratios 3. Total Debt to Total Assets Ratio = Total Debt / Total Assets 2009 - $12.924 billion / $62.053 billion = 0.21 2010 - $12.421 billion / $68.565 billion = 0.18 2011 - $12.371 billion / $79.986 billion = 0.15 As Boeing's total debt to total assets ratio is well below 1, this indicates that…show more content…
shares of common stock outstanding × Current share price = 720,613,065 × $121.50 = $87,554,487,397.50 Debt, including capital lease obligations (fair value). See Details » 2 Required rate of return on equity is estimated by using CAPM. See Details » Required rate of return on debt. See Details » Required rate of return on debt is after tax. Estimated (average) effective tax rate = (26.42% + 33.98% + 25.59% + 26.56% + 23.19%) ÷ 5 = 27.15% WACC = 15.12% From this calculation we understand that on every dollar the company spends on an investment, the company must make $15.12, plus the cost of the investment for the investment to be feasible for the company. Weighted Average Cost of Capital (WACC) Lockheed Martin Corp., cost of capital | Value1 | Weight | Required rate of
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