BUS650:Week 3 Assignment 1
Jocquetta D. Harris
BUS 650: managerial Finance (NAJ1240A)
October 22, 2012
Complete Chapter 12 Closing Case at the end of the chapter and submit answers to your instructor.
1. Most publicly traded corporations are required to submit 10Q (quarterly) and 10K (annual) reports to the SEC detailing their financial operations over the previous quarter or year, respectively. These corporate filings are available on the SEC website at www.sec.gov. Go to the SEC website, follow the "Search for Company Filings" link, the "Companies & Other Filers" link, enter "Dell Computer", and search for SEC filings made by Dell. Find the most recent 10Q and 10K and download the forms. Look on the balance sheet to find the book value of debt and the book value of equity. If you look further down the report, you should find a section titled either "Long-term Debt" or "Long-term Debt and Interest Rate Risk Management" that will list a breakdown of Dell's long-term debt.
The 10K report used for Dell Computers (Dell Inc.) is date August 3, 2012. The book value of equity (the value equals total assets less total liabilities) is calculated as follows:
Total Assets = $44,553 (millions) Total Liabilities = $35,616 the book value is calculated at $8,937 (millions) ($44,553 - $35,616). The 10Q report used for Dell Computers (Dell Inc.) is date August 3, 2012. The book value of equity (the value equals total assets less total liabilities) is calculated as follows:
Total Assets = $44,097 (millions) Total Liabilities = $34,351 the book value is calculated at $9,746 ($44,097 - $34,351). Here are the findings for the book value of debt and log-term debt from the 10K and 10Q reports:
| |10 K (millions) |10Q (millions) | |Book Value of Debt |$44,533 |$44.097 | |Long-Term Debt |$6,387 |$5,832 |
2. To estimate the cost of equity for Dell, go to finance.yahoo.com and enter the ticker symbol "DELL". Follow the various links to find answers to the following questions: What is the most recent stock price listed for Dell? What is the market value of equity, or market capitalization? How many shares of stock does Dell have outstanding? What is the beta for Dell? Now go back to finance.yahoo.com and follow the "Bonds" link. What is the yield on 3-month Treasury bills? Using a 7 percent market risk premium, what is the cost of equity for Dell using the CAPM? Current stock price for Dell = $9.59
Market Capitalization = 16.63B
Shares Outstanding = 1,838
Dell Inc. (DELL) -NasdaqGS
9.59 [pic] 0.04(0.42%) 4:00PM EDT|After Hours : 9.60 [pic] 0.01 (0.10%) 7:44PM EDT
|Like |225 | | | | |Add to Portfolio |9.55 | |Prev Close: | | |Open: |9.59 | |Bid: |9.55 x 200 | |Ask: |9.87 x 10000 | |1y Target Est: |13.70 | |Beta: |1.53 | |Next Earnings Date: |15-Nov-12[pic] | |Day's Range: |9.46 - 9.72 | |52wk Range: |9.33 - 18.36 | |Volume: |13,451,652...
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