Homework Answers
WACC = E/V * Ke + D/V * Kd * (1-T)
where
E - Market value of the firm’s equity = 13000*50.6 = 657800
D - Market value of the firm’s debt = 360000
V - E + D = 657800+360000 = 1017800
Re - cost of equity = 16%
Re - cost of debt = 9%
T - Tax rate = 0%
WACC = (657800/1017800)*16 + (360000/1017800)*9
= 10.3407349185+3.18333660837
= 13.52%
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