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Value of AT&T

See attached.

Bonds
1. Using AT&T (NYSE: T) http://finance.yahoo.com/q?s=t, discuss and analyze the firm's outstanding bond issues.
WACC
2. Using AT&T, collect the following information:

a. Cost of debt, yield to maturity on bonds and the firm's tax rate.

b. Cost of preferred stock, if any, computed using the dividend approach.

c. Cost of equity computed using the dividend growth model or CAPM.

d. Proportion or weight of debt in the capital structure of the firm.

e. Proportion or weight of preferred stock, if any, in the capital structure

f. Proportion of common equity in the capital structure.

Then compute the WACC.

Firm value

3. Now, calculate the value of AT&T using the Corporate Valuation Model by collecting the
Free Cash Flows (FCF), Free Cash Flows growth rate (g), and using the Cost of capital (WACC) computed above.

Attachments

Solution Preview

See attached.

Bonds
1. Using AT&T (NYSE: T) http://finance.yahoo.com/q?s=t, discuss and analyze the firm's outstanding bond issues.
WACC
2. Using AT&T, collect the following information:

a. Cost of debt, yield to maturity on bonds and the firm's tax rate.

b. Cost of preferred stock, if any, computed using the ...

Solution Summary

This provides the steps to calculate the Value of AT&T, Free Cash Flows (FCF), Free Cash Flows growth rate (g) and Cost of capital

$2.19