Case: Starbucks (SBUX)
Cost of Equity
- Go to Yahoo Finance (www.finance.yahoo.com) to get information on Starbucks Company (SBUX)
- Under Summary, you can find the following information
o # shares outstanding
o Price per share
o Beta
- Under Key Statistics, you can find book value per share
- The bonds section (under market data) at Yahoo Finance can provide the T-bill rate
- Use this information, along with the CAPM to estimate the cost of equity
Cost of Debt
• Go to Morningstar Bond section to get market information on Eastman Chemical's bond issues, https://finra-markets.morningstar.com/BondCenter/
• Enter Eastman Chemical to find the bond information. Note that you may not be able to find information on all bond issues due to the illiquidity of the bond market
• Go to the Yahoo or SEC site to get book market information from the firm's most recent 10Q ( →Notes to the (Unaudited) Consolidated Financial Statements → 6. Borrowings)
- Find the weighted average cost of the debt
• Use market values if you were able to get the information. Use the book values if market information was not available. They are often very close
Compute WACC. Use market value if available.