This week you have 2 problems – computing WACC for a real company and analysis of a potential product.

First, consider Microsoft.  Using the attached spreadsheet, determine MSFT’s WACC for the years 2022, 2021 and 2020 (Microsoft’s fiscal year ends in June).

Use the Beta for this year (assume it hasn’t changed).

Assume 5.3% is the risk free return (i_G from class) and 6.4% is the risk premium for stocks (S_E from class). Assume MSFT pays 4% in interest.

I’ve given you the equity for each year using the number of shares outstanding and the 200-day moving average stock price.  For debt go find their long term debt numbers.  You’ll need some other numbers as well.

Note that the units are billions of dollars, except where noted.

For your second problem:

You’re an engineer at Poseidon Marine Motors.   You make high end outboard motors for the recreational boating industry.  You’ve been assigned to be the lead engineer on a new product and you need to figure out what your project’s financials might look like.  Referring to the Project Sheet tab of the below spreadsheet, answer the questions.