Goff Computer Case

1. Book Value of Equity $6,813,000,000

Book Value of Debt $5,168,000,000

Total Book Value $11,981,000,000

2. What is the most recent stock price for dell? $15.54

What is the market value of equity or market capitalization? $29,590,000,000

How many shares of stock does dell have outstanding? 1,910,000,000

What is the beta for Dell? 1.41

Yield on a 3-month treasury bill? 0.03%

Using 7% market risk premium, cost of equity for dell using CAPM?

= 0.03% + (1.41x7%)

= 9.9%

3. Competitors BETA

Apple 1.34

Hewlett-Packard Company 1.03

Acer Incorporated 1.00

Toshiba Corporation 1.44

Sony Corporation 1.58

Levono Group Limited 1.81

International Business Machines Corp. 0.73

Samsung Electronics Co., Ltd (005930.KS) 0.55

Samsung Electronics Co., Ltd (005935.KS) 0.55

Oracle Corporation 1.12

Industry Average Beta = 1.415

Cost of Equity =

= 0.03% + (1.415x7%)

= 9.935%

It doesn’t matter whether the beta from Dell or the industry average beta is used because they are nearly the same value.

4.

YTM | Book Value (In Millions) | Percentage of Total | Price (as % of Par) | Market Value (In Millions) | Percentage of Total | Book Weight Value (%) | Market Weight Value(%) |

0.546 | 400 | 8.17% | 102.926 | 411.7 | 7.67% | 0.045 | 0.042 |

1.156 | 609 | 12.44% | 106.542 | 648.84 | 12.09% | 0.144 | 0.140 |

1.064 | 499 | 10.20% | 100.751 | 502.75 | 9.37% | 0.108 | 0.010 |

1.505 | 500 | 10.21% | 111.535 | 557.68 | 10.39% | 0.154 | 0.156 |

2.136 | 700 | 14.30% | 110.665 | 774.66 | 14.44% | 0.305 | 0.308 |

3.864 | 499 | 10.20% | 110.68 | 552.29 | 10.29% | 0.394 | 0.397 |

4.023 | 600 | 12.25% | 112.606 | 675.66 | 12.59% | 0.493 | 0.506 |

5.48 | 389 | 7.94% | 117.679 | 457.77 | 8.53% | 0.435 | 0.467 |

5.544 | 400 | 8.17% | 113.273 | 453.09 | 8.44% | 0.453 | 0.468 |

5.354...