Holt's model
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Determine BOTH the WACC and Holt's Valuation for Whole Foods Market Inc's stock.
We will be using $0 as the dividend and $26.67 as the recent share price of the stock. Tax rate for the company is 41.5%.
Additional company data can be found here:
http://www.marketwatch.com/story/10-k-whole-foods-market-inc-2009-11-27
HERE IS THE FORMULA FOR W.A.C.C.:
WACC = E/V * Re + D/V * Rd * (1-Tc)
Where:
Re = cost of equity
Rd = cost of debt
E = market value of the firm's equity
D = market value of the firm's debt
V = E + D
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate tax rate
AND HERE IS INFORMATION FOR THE HOLT'S MODEL: (*:fair value)
We need to compare against: Retailing Foods Industry as well as the competitor Kroger, Inc.
This is an example of what the model should look like (see attached).
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Solution Summary
This solution is comprised of a detailed explanation of Holt's model.
Education
- MBA, Indian Institute of Finance
- Bsc, Madras University
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