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09-02-2018

Calculate the cost of capital for BMW Group

Task

Use the Capital Asset Pricing Model (CAPM) and the cost of equity and cost of debt formulas to calculate the cost of capital for BMW Group.

You will need to source the following on the internet:

  • weight of equity
  • weight of debt
  • risk-free rate
  • beta
  • risk premium
  • cost of debt
  • tax rate

Then work out the WACC (Weighted Average Cost Capital).  

Submit the answer in the text box below in this format:

Cost of debt, K= xx.xx%

Justification (methodology): 

Source:

Cost of equity, K= xx.xx%

Justification of RF, R- RF, Beta 

Source of RF, R- RF, Beta:

Debt weight: xx.xx%

Equity weight: xx.xx%

Justification: 

Source:

WACC: xx.xx%

Note: Display the formulas.

Download Questions

Cost of debt (kd) = Interest paid annually / Principle loan amount X 100 = € 489 / € 97731 X 100 = 0.5004% For any organization, the weighted average cost of capital is calculated by taking into consideration the weighted cost of an individual’s source of capital. We have taken t=.39 (average Tax rate)The following calculations are made: