Oumou Toure FIN Project2

Topics: Wal-Mart, Department store, Discount store Pages: 4 (596 words) Published: April 15, 2015
Wal-Mart stores INC. WACC analysis

Wal-Mart Stores, Inc. is one of the biggest American multinational retail companies that operate chains of large discount department stores and warehouse stores. Wal-Mart is the world's largest company by revenue, the biggest private employer in the world with over two million employees and the largest retailer in the world and also one of the world's most valuable companies in terms of market value and is also the largest grocery retailer in the US. Wal-Mart Stores, Inc. operates retail and other stores in various formats, including membership clubs. The Company operates through three business segments: Wal-Mart U.S., Wal-Mart International and Sam's Club.

Balance Sheet
Market Cap
$270.52 B
Beta
0.26
EPS
4.87

The formula for WACC is
rWACC = (E/E+D) rE + D/(E+D) rD (1-TC)
The formula for the required return on a given equity investment is ri= rf + βi * (RMkt-rf)
RMkt-rf is the Market Risk Premium. For this project, you may assume the Market Risk Premium is 4% unless you can develop a better number. rf is the risk free rate. The YTM on 10 year US Treasury securities is a good approximation. You may assume a corporate tax rate of 40%.

YTM on 10-year US Treasury securities
= 2.22 %
Beta = 0.26
Ri = rf + βi * (RMkt - rf)
= 2.22 + 0.26 * 4 = 3.26 %
Corporate tax rate is assumed to be 40%.
Market Cap = $270.52 B

Wal-Mart Stores Inc. (Corporate Bond)
Issuer Name
Callable
Yield %
Amount Outstanding ($M)
WAL-MART STORES INC

3.73
1,000
WAL-MART STORES INC

3.239
250
WAL-MART STORES INC

0.273
750
WAL-MART STORES INC

3.97
2500
WAL-MART STORES INC

1.036
1000
WAL-MART STORES INC

2.893
750
WAL-MART STORES INC
No
1.507
1250
WAL-MART STORES INC
No
4.048
3000
WAL-MART STORES INC
No
4.284
2000
WAL-MART STORES INC
No
1.842
500
WAL-MART STORES INC

0.162
750
WAL-MART STORES INC

4.100
1250
WAL-MART STORES INC
No
2.310
1500
WAL-MART STORES INC
No...

References: http://finance.yahoo.com/q?s=WMT
https://www.google.com/finance?cid=38230
http://finra-markets.morningstar.com/BondCenter/Results.jsp
http://www.treasury.gov/
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