Your task is to determine the WACC for a healthcare organization. Your deliverable is a brief report in which you state your determination of WACC, describe and justify how you determined the number, and provide a relevant discussion of your findings. Chapter 7 covers the basic concepts of WACC. Refer to the WACC formula at the bottom of page 341: WACC = Kd(1-t)(D / V) + Ke(E/V)
HCA Healthcare (Stock Ticker Symbol: HCA)
HCA has a cost of debt of 6%, a corporate tax rate of 40%, and a debt weight of 60%.
HCA has a cost of equity of 11.4% and an equity weight of 40%.
Submit the following:
Write a 350- to 700-word report that contains the following elements:
Â· Your calculated WACC. Describe how you used the assumptions to calculate the WACC.
Â· What does HCAâ€s WACC indicate? How could decision makers use this information?
Â· How would an increase in equity or debt impact the WACC?
Â· US corporate tax rates were reduced to 21% starting in 2018. Recalculate your WACC based on the new tax rates. Describe the impact of changes in corporate tax rates on HCAâ€s WACC.
Â· Is a higher WACC good or bad? Support your answer.
Include the math used for your calculations.
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