Question

Consider the following financial data.

US 30-Year T-Bond Yield = 2.7%

Market Risk Premium = 6.25%

Tax Rate = 21%

Also the following data for Accenture:

Stock Price = $157.85

Market Cap = $100.62B

Beta = 1.26

Moodys = A1 (115 basis points)

Total Debt = $24.62 million

Number of Shares Outstanding = 637.45 million

EPS = $6.51

Return on Assets = 16.01%

Total Debt/Equity (Book Value) = .19   

Book Value/share = $19.89

Revenues = $38.57B

Calculate the Cost of Capital for Accenture. Choose the best answer from the list below.

a. 8.62%

b. 7.88%

c. 3.85%

d. 7.938%

e. 10.57%

What is the Cost of Debt for Accenture?

a. 6.25%

b. 2.95%

c. 7.2%

d. 3.85%

e. 1.15%

Calculate the MVA for Accenture.

a. $75.02B

b. $87.94B

c. $12.68B

d. $100.62B

e. $111.61B

Answer 1

1)It is option E
2)It is option D
3)MVA= market value of firm-book value of firm
book value of equity= book value per share*shares out
=19.89*637.45=12678.88mn
book value of debt=0.19*12678.88=2408.99
=(100620+24.62)-(12678.88+2408.99)
=87.94B
option B