Goff Computer
INC has been around for about eight years and has over seventy stores. Goff Computer, INC had $97 million in sales last year and wants to know what the cost of capital is. In order to answer this several steps have to be taken which include comparing the company to Dell and how they work. Dell is a major computer company and they build computers to fit the customer’s needs and demands. The task at hand for Goff Computer, INC is to determine its cost of capital. There are several steps that must be done to get to the end result.
Step 1 gives directions on how to obtain the beginning information needed about Dell.
Step 2 asks several questions and the responses are:
The most recent stock price is $18. 16
The market capitalization for Dell is 32. 62B
Dell currently has 1. 8B shares outstanding
The beta for Dell is 1. 33
The yield on 3-month Treasury bill is. 865%
The cost of equity using CAPM is 16. 71%
Reference
Ross, S., & Westerfield, R., Jaffe, J., & Jordan, B. (2011).
Corporate finance: Core principles and applications (3rd ed. ). Boston, MD
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