Wednesday, March 17, 2010

How can can be weighted average cost of debt calculated using the book value weight and market value weight of

How can can be weighted average cost of debt calculated using the book value weight and market value weight of Apple computers? where these values can be found?

How can can be weighted average cost of debt calculated using the book value weight and market value weight of
Ideally, you should use market weights for the debt costs, but book value is a good approach nonetheless. The approach is to take the debt and multiple it by the associated interest cost, respectively, to arrive at the weighted average cost of debt. You have to decide if you should include off-balance sheet debt.





For Apple, what you have to do is obtain Apple's most recent audited financial statement (typically an annual report or form 10-K filing) and read what the accountants are saying about Apple's debt. Apple has no on-balance sheet debt but it has lots of off-balance sheet debt as outlined in footnote #8 entitled Commitments and Contingencies.


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