Target Corporation: Weighted Average Cost of Capital

Code : FCF0015

Year :
2011

Industry : Retail

Region : US

Teaching Note:Not Available

Structured Assignment :Not Available

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Abstract: The case study has been written primarily to bring out one of the core concepts in finance - Weighted Average Cost of Capital (WACC).

Though there are many methods to calculate the cost of capital, WACC is widely used and is popular.

The case study focuses on a discussion on WACC between a professor and his students. It further explains the importance of cost of capital and capital mix.

It will help the learners to understand the intricacies involved in WACC calculations using the example of of Target Corporation - one of the largest retail chain stores in the United States.

Pedagogical Objectives:

  • Analyze the relevance of cost of capital and use of WACC in its calculation

  • Understand how to calculate WACC with real time data and bring out the difference between theory and practice

  • Understand the limitations of WACC

  • Examine the different available alternatives to calculate cost of capital.


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    Keywords : Weighted Average Cost of Capital (WACC), Target Corporation, Cost of Equity, Cost of Debt, CAPM, Risk Free Rate, Beta, Market Return, Stock Return, Require Rate of Return

    Contents :
    Understanding Weighted Average Cost of Capital
    Choosing a Company
    Setting Parameters


    Case Introduction >>


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