how can we calculate the WACC assuming we have tax 30% for case 12: H.J. Heinz 1. Using data from…

how can we calculate the WACC assuming we have tax 30% for case 12: H.J. Heinz 1. Using data from…
how can we calculate the WACC assuming we have tax 30% for case 12: H.J. Heinz 1. Using data from Exhibit 12.2 and Exhibit 12.3, estimate the total book value of debt (both short-term and long-term) and market value of equity as of April 2009 and 2010. In addition, compute the weight of debt and equity in both years. Are there many differences in these weightings? Exhibit 2
H. J. Heinz: Estimating the Cost of Capital in Uncertain Times
Balance Sheet
(numbers in thousands except per-share amounts; fiscal year ends in April)

Data source: H. J. Heinz SEC filings, 2008–10. 2008 2009 2010
Cash 617,687 373,145 483,253
Net receivables 1,161,481 1,171,797 1,045,338
Inventories 1,378,216 1,237,613 1,249,127
Other current assets 168,182 162,466 273,407
Total current assets 3,325,566 2,945,021 3,051,125
Net fixed assets 2,104,713 1,978,302 2,091,796
Other noncurrent assets 5,134,764 4,740,861 4,932,790
Total assets 10,565,043 9,664,184 10,075,711
Accounts payable 1,247,479 1,113,307 1,129,514
Short-term debt 124,290 61,297 43,853
Current portion of long-term debt 328,418 4,341 15,167
Other current liabilities 969,873 883,901 986,825
Total current liabilities 2,670,060 2,062,846 2,175,359
Long-term debt 4,730,946 5,076,186 4,559,152
Other noncurrent liabilities 1,276,217 1,246,047 1,392,704
6,007,163 6,322,233 5,951,856
Equity 1,887,820 1,279,105 1,948,496
Total liabilities and equity 10,565,043 9,664,184 10,075,711
Shares outstanding (in millions of dollars) 311.45 314.86 317.69 DO NOT COPY Page 7 UVA-F-1634
Exhibit 3
H. J. Heinz: Estimating the Cost of Capital in Uncertain Times
Capital Market Data
(yields and prices as of the last trading day in April of the year indicated)
Average Historic Yields
2003 2004 2005 2006 2007 2008 2009 2010
1-year 1.22% 1.55% 3.33% 4.98% 4.89% 1.85% 0.49% 0.41%
5-year 2.85% 3.63% 3.90% 4.92% 4.51% 3.03% 2.02% 2.43%
10-year 3.89% 4.53% 4.21% 5.07% 4.63% 3.77% 3.16% 3.69%
30-year1 4.79% 5.31% 4.61% 5.17% 4.89% 4.49% 4.05% 4.53%
Moody’s Aaa 5.53% 5.87% 5.21% 5.95% 5.40% 5.51% 5.45% 5.13%
Moody’s Baa 6.65% 6.58% 5.97% 6.74% 6.31% 6.87% 8.24% 6.07%
3-month commercial
paper 1.21% 1.08% 2.97% 4.90% 5.22% 1.91% 0.22% 0.24%

Heinz Capital Market Prices of Typical Issues
2009 2010
Heinz stock price $34.42 $46.87
Bond price: 6.750% coupon, semiannual bond due 3/15/32 (Baa rated) 91.4 116.9
Bond price: 6.625% coupon, semiannual bond due 10/15/12 (Baa rated) 116.5 113.7

Note that bond data were slightly modified for teaching purposes.
Data sources: Federal Reserve, Value Line, Morningstar, and case writer estimates.
1 The 20-year yield is used for 2003–05, when the 30-year was not issued.       May 05 2022 06:10 PM

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