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Northrop Grumman Corporation Case Study

This is a case problem to be solved on an aspect of corporate finance. You will be required to write a short report in which you estimate and critically evaluate the Weighted Average Cost of Capital of a publicly quoted company from first principles. The firm must have quoted corporate bonds and be capitalised in excess of €1 billion.

To estimate the WACC you will need to work out:

• Cost of Equity using both CAPM and Gordon models
• Cost of Debt  – using a mix of methods
• Weight of Equity using market values
• Weight of Debt using market values

Your report should be contained in a short (4 or 5 pages, size 12) report in word format including references and formulae used etc…