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Fiscal year ends in December. 2017-12 2016-12 2015-12 2014-12 2013-12 Assets Current assets Cash and cash...

Fiscal year ends in December.

 2017-12 2016-12 2015-12 2014-12 2013-12
Assets
Current assets
Cash and cash equivalents                  401                  603                  628                  669                  592
Short-term investments                     18                  417                  810                  292                  487
Receivables                  970                  938                  982               1,129               1,052
Inventories                  372                  407                  350                  273                  252
Deferred income taxes                  126                  141                  155
Other current assets                  154                  122                     70                     68                     64
Total current assets               1,915               2,487               2,966               2,572               2,602
Non-current assets
Gross property, plant and equipment            44,324            43,227            41,574            39,343            37,184
Accumulated Depreciation          (12,560)          (12,077)          (11,400)          (10,759)            (9,893)
Equity and other investments               1,686               1,459               1,394               1,356               1,298
Goodwill                     63                     63                     63                     63                     64
Other long-term assets                  311                  255                  442                  478                  527
Total non-current assets            33,824            32,927            32,073            30,481            29,180
Total assets            35,739            35,414            35,039            33,053            31,782
Liabilities
Current liabilities
Short-term debt                     19                  331                     20                  228                  533
Accounts payable                  847                  806                  764                  845                  957
Taxes payable                  157                  129                  108                  163                     91
Other current liabilities                  871                  774               1,060                  871                  843
Total current liabilities               1,894               2,040               1,952               2,107               2,424
Non-current liabilities
Long-term debt            11,790            10,962            10,683               9,514               9,022
Deferred taxes liabilities               6,418               9,596               9,305               8,858               8,662
Minority interest                     16                     15                     16                     24                     21
Other long-term liabilities                  900               1,107               1,415               1,374               1,149
Total non-current liabilities            19,124            21,680            21,419            19,770            18,854
Total liabilities            21,018            23,720            23,371            21,877            21,278
Stockholders' equity
Common stock                  890                  928                  966                  992               1,009
Additional paid-in capital                  217                  138                  113                     92                     61
Retained earnings            14,084            11,253            11,238            10,734               9,936
Accumulated other comprehensive income                (470)                (625)                (649)                (642)                (502)
Total stockholders' equity            14,721            11,694            11,668            11,176            10,504
Total liabilities and stockholders' equity            35,739            35,414            35,039            33,053            31,782
CSX CORP (CSX)   INCOME STATEMENTS
Fiscal year ends in December.
US Dollars in millions except per share data. 2017-12 2016-12 2015-12 2014-12 2013-12
Revenue            11,408            11,069            11,811            12,669            12,026
Cost of revenue               5,121               5,204               5,765               6,641               6,142
Gross profit               6,287               5,865               6,046               6,028               5,884
Operating expenses               2,514               2,476               2,462               2,415               2,411
Operating income               3,773               3,389               3,584               3,613               3,473
Interest Expense                  546                  579                  544                  545                  562
Other income (expense)                  (85)                  (69)                     98                  (24)                     11
Income before income taxes               3,142               2,741               3,138               3,044               2,922
Provision for income taxes                  613                  677                  820                  767                  708
Net income               2,529               2,064               2,318               2,277               2,214
Preferred dividend                       1                       1                       1                       1                     (1)
Net income available to common shareholders               2,528               2,063               2,317               2,276               2,215
Earnings per share
Basic                 6.01                 1.81                 2.00                 1.93                 1.83
Diluted                 5.99                 1.81                 2.00                 1.83                 1.83
Weighted average shares outstanding
Basic                  911                  947                  983               1,001               1,019
Diluted                  914                  948                  984
CSX Bond Schedule 12/31/17
Name Maturity Date Face Amount $(Mil) Current Price Coupon % Callable Yield to Maturity % Market Value $ (Mil)
Csx 6.25% 03/15/18 600.00 114.20 6.250 Yes 1.610 685.20
Csx 7.375% 02/01/19 500.00 121.00 7.375 Yes 1.950 605.00
Csx 3.7% 10/30/20 750.00 107.20 3.700 Yes 2.360 804.00
Csx 9.87% 02/12/21 200.00 134.00 9.870 No 3.800 268.00
Csx 4.25% 06/01/21 350.00 108.50 4.250 Yes 2.830 379.75
Csx 8.625% 05/15/22 300.00 132.30 8.625 No 3.690 396.90
Csx 8.1% 09/15/22 350.00 131.70 8.100 No 3.490 460.95
Csx 7.25% 05/01/27 400.00 115.00 7.250 No 5.450 460.00
Csx 7.25% 05/01/27 250.00 116.20 7.250 No 5.460 290.50
Csx 6.95% 05/01/27 350.00 113.00 6.950 No 5.350 395.50
Csx 7.95% 05/01/27 200.00 129.80 7.950 No 4.800 259.60
Csx 6.8% 12/01/28 550.00 123.50 6.800 Yes 4.530 679.25
Csx 6% 10/01/36 750.00 121.90 6.000 Yes 4.420 914.25
Csx 6.15% 05/01/37 750.00 134.30 6.150 Yes 3.840 1007.25
Csx 7.45% 04/01/38 200.00 124.10 7.450 Yes 5.620 248.20
Csx 6.22% 04/30/40 660.00 127.00 6.220 Yes 4.440 838.20
Csx 5.5% 04/15/41 850.00 126.70 5.500 Yes 3.870 1076.95
Csx 4.75% 05/30/42 750.00 114.70 4.750 Yes 3.870 860.25
Csx 4.4% 03/01/43 600.00 100.60 4.400 Yes 4.370 603.60
Csx 4.1% 03/15/44 800.00 105.20 4.100 Yes 3.810 841.60
Totals 10160.00 12074.95
or or
10.16 12.07
billion

billion

Market value of equity (market cap) $                        50.27
Growth rate for equity 7.67%
Market price of stock (per share) $                                  55.01
Annual dividend $                          0.78
Beta of stock 1.19
Risk free rate 1.80%
Market rate of return 8.70%
DGM cost of equity (stock) 9.20%
CAPM cost of equity (stock) 10.01%
Average cost of equity 9.60%
Market value of debt 12.70
Average tax rate 0.24%
Pre tax cost of debt (bonds) 3.83%
After tax cost of debt (bonds) 2.91%

What is my total Market value of equity and debt ?

What is my wieght for equity?

What is my wieght for debt ?

What is my wieghted average cost of capital ?

What is my Capital structure percentage debt and equity ?

I know that this is a long problem but i got confused at the end, so thank you for your help i appreciate it.

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Homework Answers

Answer #1

a.

Market value of equity = $50.27 billion

Market value of debt = $12.70 billion.

Market value of total capital = $50.27 + $12.70

= $62.97 billion.

Market value of total capital is $62.97 billion.

b.

Weight of equity = $50.27 / $62.97

= 79.83%

Weight of equity is 79.83%.

c.

Weight of debt = $12.70 / $62.97

= 20.17%

Weight of debt is 20.17%.

d.

Average cost of equity = 9.60%

After tax cost of debt = 2.91%

WACC is calculated below:

WACC = (79.83% × 9.60%) + (20.17% × 2.91%)

= 7.66% + 0.59%

= 8.25%

WACC of company is 8.25%.

e.

Capital structure percentage debt is 20.17% and equity is 79.83%.

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