Amazon equity beta Market risk premium 1.5 5.00% 10-year Treasury 1 Jan 2020 Cost of equity 1.90% Cost of debt 2.00% Shares outstanding 31 Dec 2019 504 million Debt/ (debt + equity) 2.60% Tax rate 17.0% Discount rate (WACC) Growth rate
Amazon equity beta Market risk premium 1.5 5.00% 10-year Treasury 1 Jan 2020 Cost of equity 1.90% Cost of debt 2.00% Shares outstanding 31 Dec 2019 504 million Debt/ (debt + equity) 2.60% Tax rate 17.0% Discount rate (WACC) Growth rate
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![**Financial Metrics Overview:**
1. **Amazon Equity Beta:** 1.5
- A measure of Amazon's stock volatility compared to the market.
2. **Market Risk Premium:** 5.00%
- The return expected from the market over the risk-free rate.
3. **10-Year Treasury Rate (1 Jan 2020):** 1.90%
- Considered a risk-free rate for this time period.
4. **Cost of Debt:** 2.00%
- The effective rate a company pays on its borrowed funds.
5. **Shares Outstanding (31 Dec 2019):** 504 million
- The total number of a company's shares of stock that are owned by shareholders on this date.
6. **Debt Ratio (Debt / (Debt + Equity)):** 2.60%
- The proportion of debt used in financing the company relative to the total capital.
7. **Tax Rate:** 17.0%
- The percentage of income paid as tax.
8. **Discount Rate (WACC):**
- Not provided, but typically calculated using the company's cost of equity and after-tax cost of debt, weighted by the equity and debt ratios.
9. **Growth Rate:**
- Not provided, but would be used for future cash flow estimates.
**Note:** This information helps determine the company's cost of capital and assess investment potential.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbe3e8e93-7837-41e5-bd55-b3c8f93a8315%2F33a9508e-0c76-43ce-b86b-67529fab9d06%2Fjvtx5a_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Financial Metrics Overview:**
1. **Amazon Equity Beta:** 1.5
- A measure of Amazon's stock volatility compared to the market.
2. **Market Risk Premium:** 5.00%
- The return expected from the market over the risk-free rate.
3. **10-Year Treasury Rate (1 Jan 2020):** 1.90%
- Considered a risk-free rate for this time period.
4. **Cost of Debt:** 2.00%
- The effective rate a company pays on its borrowed funds.
5. **Shares Outstanding (31 Dec 2019):** 504 million
- The total number of a company's shares of stock that are owned by shareholders on this date.
6. **Debt Ratio (Debt / (Debt + Equity)):** 2.60%
- The proportion of debt used in financing the company relative to the total capital.
7. **Tax Rate:** 17.0%
- The percentage of income paid as tax.
8. **Discount Rate (WACC):**
- Not provided, but typically calculated using the company's cost of equity and after-tax cost of debt, weighted by the equity and debt ratios.
9. **Growth Rate:**
- Not provided, but would be used for future cash flow estimates.
**Note:** This information helps determine the company's cost of capital and assess investment potential.
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