You will need to get Beta, closing stock price, 10-year Treasury rate, and the bond debt outstanding for Starbucks.

Here are the instructions:

For the mini case 2, use close of business this Friday (7-12-2024) for the Starbucks cost of capital.
You will need to get Beta, closing stock price, 10-year Treasury rate, and the bond debt outstanding for Starbucks. The face value of the debt outstanding multiplied by the Price of the debt (remember the Price is a % ex. 102 means 102% of face value) = the market value of that bond.

I have attached modules (examples) for each case, such as Module 1 for Mini Case 1, Module 2 for Mini Case 2, and so on. There are five files in total:

The first file (the exam) contains templates that need to be filled out.
The Word file contains the mini-case questions.
The three-module files are solution examples for each mini-case.

Use CAPIQ. The Tearsheet can get you items like beta and closing stock price. The fixed income securities summary can get you the debt information.

Use YTW as the market yield for the bond. You want the current yield.

Here’s how we get from Re to Ru”

Our basic equation is Re = Ru + (Ru-Rd) * (D/E) * (1-T)

We multiply through and get the following:

Re = Ru + (Ru * D/E * (1-T)) – Rd * (D/E) * (1-T)

Add the Rd term to both sides and we get

Re + Rd * (D/E) * (1-T) = Ru + Ru * D/E * (1-T)

Factoring out the Ru

(Re + Rd * (D/E) * (1-T)) = (1 + 1 * D/E * (1-T)) * Ru

Divide both sides by (1 + 1 * D/E * (1-T))

(Re + Rd * (D/E) * (1-T)) / (1 + 1 * D/E * (1-T)) = Ru

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