Im currently doing my own research, and im wanting to know where you get the interest bearing debt value from in the Discount Rate (WACC) column.
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Good question Neil. The interest bearing debt value comes from the liabilities section of the balance sheet. The interest bearing liabilities include short term interest bearing debt and long-term interest bearing debt. For the total debt value, we include all liabilities for which the company must pay interest. Besides the interest bearing debt, we also include preferred stock, which incurs interest charges, and minority interest when calculating the total debt to capital holders. All of our models pull data from the discounted cash flow analysis, which may give you additional information and breakdowns of the numbers.
I hope this helps. Ask any questions you may have. We can also implement your suggestions to improve our analysis.
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Hi, my question is how to get the market risk rate and the free risk rate for Coeur d’Alene Mines Corporation (NYSE:CDE)?
I'm sorry that we don't already have CDE in our list of companies, but I can still answer your question.
1. The Risk Free Rate of interest is found here: http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml. We use the 20 year rate for all companies, because we expect to invest in those companies for the next 20 years.
2. The Market Risk Rate, which I assume is the Market Risk Premium or Equity Risk Premium (definition) is 5% for all companies that we follow. This is the premium over the risk free rate that investors need in order to purchase equity investments. Academic research supports the 5% premium.
Write back any questions. Thank you
thank you that was very helpful; I am trying to get the bond rate of Coeur d’Alene Mines Corporation (NYSE:CDE); what I mean is if this firm issues a bond, how much the Bond rate would be? I am a student and doing a research. thank you.
There are a number of ways to do this:
1. If they already have interest-bearing debt outstanding, then you take their current interest rate and divide it by their total interest-bearing debt amount. You must check the financial statement notes to make sure the interest rate will not dramatically change at some date in the future. This is a pretty easy and standard method.
2. You can check their S&P, Moody's,… etc bond ratings, then check the corporate bond yield to match the rating with the expect interest rate in the market. See this page under the academic resources —> cost of debt section: http://www.bondsonline.com/Todays_Market/Composite_Bond_Yields_table.php
3. You can use a comparable approach. Use the technique from the first approach, but figure out the number for each of their competitors. Then average the numbers together.
These solutions will certainly solve your problem, but I imagine you could also call the company and get some type of answer.
I hope this helps,
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If the company iam evaluating just sold an unsecure senior note in february for $100,000,000 and the interest is 6.5%, is 6.5% the cost of debt? and how to calculate the net borowing in the FCFE(free cash flow to the equity)?
I would appretiate the help. answering this question would help me a lot in my school project.
1. In a narrow sense, you can assume the 6.5% yield is the cost of debt for that subject company. You need to know the cost of all the other debt that your company owns in order to understand the average cost of debt for that company. In the next update to the site, we will introduce an implied cost of debt, which is the net interest expenses / total interest bearing debt.
WikiWealth differs in their approach to the cost of debt, because we take an industry average cost of debt and assume that each company will gravitate towards that optimal cost of debt over the long term. We make assumptions for 20 yr time periods. Individual measurements of cost can change over the short time, so we don't rely on them.
2. If we understand correctly, net borrowing is just the difference between what you borrowed and what you lent. We may need more information to understand your question.
Good luck. WikiWealth
Can you tell me what is the long-term GDP is Please? and what website I can get it from?
I would just google search for LT gdp rates per country. As for the US, 3% is a conservative estimate.