Calculate the cost of equity for Texas Instruments

In this question you are required to extract financial information on Texas Instruments which can be found in its annual report. You should refer in
particular to Texas Instruments’ 2020 consolidated financial statements. The notes to these statements may also be relevant.
You are required to:
a. use two appropriate methods to calculate the cost of equity for Texas Instruments (20 marks)
b. use two methods to calculate a cost of debt for Texas Instruments (20 marks)
c. If you have to select one of the methods from above, which one would you choose and why? (10 Marks)
d. If you would be prospective investor, would you invest in Texas shares or bonds? Specify the reason. (10 Marks)
Make sure you clearly describe and reference the source of the information used in your calculations. If you would like to use an additional
approach that requires external information, you should provide details of these additional sources and your reasons for using them.
Note the following:
· the risk-free rate is 1.14% p.a.
· the equity risk premium is 2.7% p.a.
In addition to your numerical work, you should provide an explanation of your methodology and justify your choice of inputs in the formula.
Remember to show all your calculations in detail.
Note: this question is not just testing your ability to derive calculations; it is also looking at your understanding of which financial information is
relevant for the calculations and how to deploy it.
Contextual Information:
The students can base their replies on wider research, even from the internet sources, however, all information should be appropriately referred
using Business School’s referencing style. Though students’ quantitative analysis will be same, however, justification, use of theory, paper structure
and background for recommendation is to be explained in detail for which you will get higher awards.
Submission is required in MS Word format. Students must have a cover page and word limit written on the same.
• Wordcount: No specific word limits will be applied to some of the questions in this TMA.
• Cover, Table of Contents, References and Appendix are excluded of the total wordcount.
• Font: Arial 12,5 pts.
• Text alignment: Justified.
• The in-text References and the Bibliography have to be in Harvard’s citation style.
Submission and weightage: As per assessment details
It assesses the following learning outcomes:
· Outcome 1: categorize the value of bonds as per risk, maturity, rate of return;
· Outcome 2: Assess bonds yields within the current financial markets’ conditions;
· Outcome 3: Analyze the different types of stocks (preferred and common), asses their value and rate of return.

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