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Microsoft

Base your answers on information from the most current bond and stock quotations from The Wall Street Journal, a Standard & Poor's Bond Guide, bondsonline.com, or another reliable bond information source.

? How is Microsoft's bonds listed? How many bond issues does the company currently have listed on the bond market and what are their market prices? In what year will the bonds mature? What is the current yield on the listed bonds, assuming an indefinite maturity date? What is the weighted-average interest rate (yield to maturity of the listed bonds? How is the company's stock listed? What is the current market price of the company's common stock? What is your stock's Beta? What is Microsoft's stock's required rate of return using the Capital Asset Pricing Model (CAPM)? (Assume the average T-Bill yield is 5.5%, and the market return is 10%)
? Does Microsoft have any preferred stocks outstanding? List them. What is the weighted average of all the yields of the preferred stocks?
What percentage of Microsoft is financed by debt? What percentage of the company is financed by equity? What percentage of Microsoft is financed by preferred stock? What is Microsoft's Weighted Average Cost of capital (WACC)?

***** PLEASE LIST 2 to 3 SOURCES THAT CAN BE ACCESSED. ACTUAL SOURCES OF ANSWERS TO QUESTIONS******

1. Imagine that you've prepared a Capital Budget for your company and made an investment decision. You've gathered all your Cost data and estimated your Cash Inflows and chose the project or investment that would benefit your company the most. What could go wrong? What would you do to manage what went wrong?

2. What are effective ways for company financial managers to manage risk? If you were a company financial manager, how would you manage your company's risk?

3. Assuming you worked for Apple, How can you apply Capital Budgeting methods with the company that you work for? If you were the CFO for your company, what changes would you make in the company project investment decisions?

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Microsoft is one of the largest computer software organizations in the world having revenues of more than $45 bn annually. It has got a monopoly in operating software industry and is providing a wide variety of software and ecommerce services and products. This includes operating systems for personal computers (PGs) and servers; server applications for client/server environments; business and consumer productivity applications; software development tools; and Internet and intranet software and technologies. The company has expanded its interactive content efforts, including NSN (the Microsoft Network online service), various Internet-based services, and entertainment and information software programs. Microsoft also sells PC books and input devices, and it researches and develops advanced technologies for the future software products.

http://finance.yahoo.com/q/pr?s=MSFT

? How is Microsoft's bonds listed? How many bond issues does the company currently have listed on the bond market and what are their market prices? In what year will the bonds mature? What is the current yield on the listed bonds, assuming an indefinite maturity date? What is the weighted-average interest rate (yield to maturity of the listed bonds?

Microsoft has not issued any debt.
(References: http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=US:MSFT&lstStatement=Balance&stmtView=Ann)

How is the company's stock listed? What is the current market price of the company's common stock? What is your stock's Beta? What is Microsoft's stock's required rate of return using the Capital Asset Pricing Model (CAPM)? (Assume the average T-Bill yield is 5.5%, and the market return is 10%)

Company's stock is listed in the NASDAQ stock exchange. Its current market price is $29.52 per share. The stock's beta is 1.04
The stock's required rate of return =10.18% (For details see excel file attached)

(Source of Beta and other data: http://finance.yahoo.com/q/ks?s=MSFT)

Does Microsoft have any preferred stocks outstanding? List them. What is the weighted average of all the yields of the preferred stocks? What ...

Solution Summary

Microsoft is assessed.

$2.19