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Dell: Estimate total market value, cost of debt and equity, WACC

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I really need help with this assignment. We were given 7 firms and we must answer the three questions based on the information we find on Yahoo! Finance or any other financial website. I don't have a good foundation on the subject. If someone can be kind enough to answer the 3 questions for 1 firm, I can use that as a guide to answer the questions for the other 6 firms. DELL is a strong solid company. Please set DELL as the example firm. I am not asking for my assignment to be done, I need a guide.

Answer these questions for each of the companies (7) assigned to you:

1.) Estimate the total market value of long-term debt and equity

2.) The firm's cost of debt and equity capital

3.) And the appropriate after-tax weighted average cost of capital (WACC) for the firm

Use Yahoo! Finance or Morning star to obtain figures. Obviously you must use current information, or figures (2005 or 2004), in order to calculate the market value. Remember to be consistent in answering the questions.

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Solution Summary

The solution carefully explains the concepts, shows the formulas, and works the problems for Dell.

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Please see attached problem...

Prepare responses to the questions posed by the "What's on the Web?" exercises 12.1, 12.2 (in 12.2 you can find the beta for Dell by going to the web site yahoo.finance.com under Stock Price History), 12.3 (for simplicity assume that the company's long-term debt consists of $200 million in long term bonds and $300 million in debentures, assume the book value and market value of the Dell debentures are the same and that the coupon rate is also the yield to maturity). You can figure out the market value of the $200 million Dell bonds by multiplying the book value by the Price column value found in www.bondsonline.com and 12.4 found at the end of Chapter 12 of the text. Your end product of these exercises will be the Dell Computer's WACC. Include exhibits that show all of the calculations used to calculate Dell's WACC.

b. Describe the implications of WACC in relation to Dell's goal of shareholder wealth maximization. Include a brief discussion of how internal and external factors can impact the organization's WACC.

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