What does HCA’s WACC indicate?
I’m working on a Health & Medical question and need guidance to help me study.
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:
Your calculated WACC. Describe how you used the assumptions to calculate the WACC.
What does HCA’s WACC indicate? How could decision makers use this information?
How would an increase in equity or debt impact the WACC?
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 HCA’s WACC.
Is a higher WACC good or bad? Support your answer.
You must proofread your paper. But do not strictly rely on your computer’s spell-checker and grammar-checker; failure to do so indicates a lack of effort on your part and you can expect your grade to suffer accordingly. Papers with numerous misspelled words and grammatical mistakes will be penalized. Read over your paper – in silence and then aloud – before handing it in and make corrections as necessary. Often it is advantageous to have a friend proofread your paper for obvious errors. Handwritten corrections are preferable to uncorrected mistakes.
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