Cost of Debt Evaluation - LOWES COS INC.
(LOW)
MATURITY YTM QUOTED PRICE BOOK VALUE ($000) MARKET VALUE (($00
3/15/2029 4.143 119.764 500,000 598820
10/15/2035 4.759 108.573 750,000 814297.5
10/15/2035 4.504 115.88 500,000 579400
9/15/2037 4.75 123.533 1,000,000 1235330
4/15/2020 2.853 101.725 1,350,000 1373287.5
4/15/2040 4.59 116.203 1,250,000 1452537.5
4/15/2021 3.059 101.491 1,000,000 1014910
11/15/2021 3.189 101.641 1,100,000 1118051
11/15/2041 4.524 108.461 1,000,000 1084610
4/15/2022 3.304 99.397 1,300,000 1292161
4/15/2042 4.435 103.079 1,000,000 1030790
9/15/2043 4.62 105.524 1,000,000 1055240
9/15/2023 3.417 101.961 3,000,000 3058830
9/10/2019 2.832 100.306 500,000 501530
9/15/2024 3.471 98.124 1,000,000 981240
9/15/2044 4.517 95.943 1,000,000 959430
9/15/2025 3.808 97.388 1,000,000 973880
9/15/2045 4.471 98.508 1,000,000 985080
4/15/2019 3.548 100.12 1,600,000 1601920
4/15/2019 2.629 99.27 750,000 744525
4/15/2028 3.843 91.326 1,000,000 913260
TOTAL MARKET VALUE 22,600,000 23369129.5
With the following tax rate, the aftertax cost of debt will be:
TAX RATE 35%
AFTER TAX COST OF 2.49181721276567
S INC. (LOW)
MARKET WEIGHT(%) WEIGHTED COST (%)
2.56244033394569 0.10616190303537
3.48450078125503 0.165827392179927
2.47933924967124 0.111669439805193
5.28616181445697 0.251092686186706
5.87650258859664 0.167656618852662
6.21562519048902 0.285297196243446
4.34295167049333 0.132850891600391
4.78430743430131 0.152571564079869
4.6412083941766 0.209968267752549
5.52935016257238 0.182689729371391
4.41090456535833 0.195623617473642
4.51552977187276 0.208617475460522
13.0891910201448 0.447257657158346
2.14612187415881 0.060778171476178
4.19887270512152 0.145742871594768
4.10554445342091 0.185447442961023
4.16737816442842 0.158693760501434
4.21530463939618 0.188466270427403
6.85485524824534 0.243210264207745
3.18593381922934 0.083758200107539
3.90797611866544 0.150183522240313
TOTAL COST OF DEBT 3.83356494271642
Cost of Equity Evaluation - LOWES COS INC. (LOW)
Stock quote link
Stock price: $ 105.60
Dividend: $ 1.92
Key statistics link
Beta: 1.39
Shares outstanding: 814,000,000
Analysts' estimates link
5-year dividend growth: 21.50%
internal growth rate -9.01%
ROA 16.14%
EPS 1.19
Payout ratio 161%
sustainable growth rate -25.51%
ROE 55.84%
Bond center link:
Risk-free rate: 1.39
The market risk premium is not publicly available and requires some judgment. We will use the same market risk pr
Market risk premium: 5.50%
Now we have enough information to calculate the market value of equity, as well as the required return using both
Market value of equity: $ 85,958,400,000
Cost of equity
Dividend discount model: 8.06%
use internal growth rate
CAPM: 1.47%
In our calculation, both the dividend discount model and CAPM estimates for the cost of equity made economic sen
average them.
Cost of equity: 4.77%
- LOWES COS INC. (LOW)
s some judgment. We will use the same market risk premium as the textbook:
ue of equity, as well as the required return using both the dividend discount model and CAPM.
-23.70%
use sustainable growth rate
M estimates for the cost of equity made economic sense. Since they were both reasonable, we
WACC Evaluation - LOWES COS INC. (LOW)
The detailed calculation of cost of debt and equity is from previous excel files.
Cost of equity: 4.77%
Market value of equi$ 85,958,400,000
Aftertax cost of debt 2.49%
Market value of deb $ 23,369,129,001
Weight of debt: 21.38%
Weight of equity: 78.62%
WACC: 4.28%
