Canadian Pacific Railway Limited (TSX:CP)
you will estimate the weighted average cost of capital of a
publicly traded company. You will study the same company you studied in
Assignment 1（Canadian Pacific Railway Limited (TSX:CP)）.
You are required to follow the steps outlined below and produce a report in the
form of an 'executive summary' which
should be no more than one page long. The report should stand on its own i.e.
you should include a spreadsheet which includes all the data and formulas, but
only as a reference tool.
To estimate the
cost of capital you will need to estimate the cost of equity of the company
using the Capital
Asset Pricing Model (Excel attached)(you need to estimate beta yourself and show the calculations in
the accompanying spreadsheet) and the cost of debt as well as the appropriate
weights to use for each of them. Because data on preferred shares can be
difficult to find, you can ignore them for the purposes of this assignment.
Make sure to watch the accompanying Cost of Capital screencast in Module 6
before completing this assignment.