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DeVry University
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Memo To: DELL STAKEHOLDERS From: DELL LTD MANAGEMENT Date: 27th April 2019 Subject: Dell Corporation Cost of Capital Analysis The purpose of this memo is to present the calculation of the weighted cost of capital (WACC) for Dell Corporation using the market-weighted values, and the book weighted values for the first quarter of 2019 Book Value of Equity The book value of equity of an organization is the same as its shareholders’ equity, which is computed by subtracting the total liabilities from the total assets. This is attained using the following formula 𝐵𝑜𝑜𝑘 𝑉𝑎𝑙𝑢𝑒 𝑒𝑞𝑢𝑖𝑡𝑦 = 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 − 𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 The current book value of equity was obtained from the form 10-Q filed with Sec for the quarterly period ended May 3, 2019. As a result, the form 10-Q of Dell had the following values Total Assets $109,892 Total liabilities $109,779 Stockholders’ equity $113 million As of May 3, 2019, the form 10-Q showed the book value of equity to be $113 million. The book value of debt of Dell Corporation was obtained from the form 10-Q 2019. The Book value of debt was as shown below Short-term debt $4,884 Long-term debt $48,640 Total book value of debt $53,524 STREET ADDRESS, CITY, STATE ZIP CODE T: TELEPHONE W: WEBSITE Cost of Equity Estimating the cost of equity requires one to have several information, which were collected from yahoo.com. The foll ...
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