Target Corp. Weighted Average Cost of Capital
According to the consolidated balance sheet on January 30, 2010 (exhibit 1), the total amount of debt, including shortterm and longterm debts and other current liabilities was at $16.814 billion. Account Payable is excluded from the WACC’s debt component because it is not a source of funding that comes from …show more content…
Given these approximations, the CAPM model would total the riskfree rate and the market risk premium times beta to arrive at a cost of equity of 9.68%, which reflects the investors’ expected return from investing in shares of the company.
According to the company’s annual report in 2009, the Federal statutory tax rate is 35%. Along with the above analysis, we have gathered all the key information necessary to estimate the WACC as following: Debt proportion  31.7%  Cost of Debt  5.06%  Corporate

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