Project #157105 - Compute the WACC for Intel

Business Tutors

Subject Business
Due By (Pacific Time) 11/30/2016 02:00 pm

 

Compute the WACC for Intel.  Use 5 years of annual data for the S&P 500 and INTC stock to compute risk premia and the Intel beta.  Assume a constant 1% annual risk-free rate for the 5 year period.

 

You can use the information at Morningstar.com to compute the INTC k(d).  Use most-recent annual balance-sheet information (not market values for equity and debt) to compute weights w(d) and w(e).  Ignore preferred stock.

 

Assume, as usual, a tax rate of 25%.

 

Now that you have the WACC for Intel, consider the following questions independently (two-sentence answers are the maximum allowed for these):

 

 

 

1.       If Intel is considering an investment that will not have overlapping impacts on the current project portfolio and has a beta of 1 and an expected Internal Rate of Return E(IRR) of .12, should they consider moving forward?

 

 

 

2.      If Intel is considering an investment that will not have overlapping impacts on the current project portfolio, has a beta of 1.4 and an E(IRR) of .12, should they consider moving forward?

 

 

 

3.      If Intel is considering an investment that will not have overlapping impacts on the current project portfolio, has a beta of .5 and an E(IRR) of .06, should they consider moving forward?

 

 

 

You will have to run risk-premium regressions using whatever package you choose.  Turn in calculations on an excel spreadsheet (multiple tabs if necessary). 

 

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