Homework Answers
4.
cost of equity=(D1/P)+g
=(2.53/25.51)+3.18%
=13.10%
cost of debt using excel function=RATE(nper,pmt,pv,fv)
=RATE(12*2,1000*5.64%/2,-1000*97.10%,1000)*2
=5.98%
WACC=Weight of equity*cost of equity+weight of debt*cost of debt*(1-tax rate)
=67.00%*13.10%+(1-67.00%)*5.98%*(1-28.00%)
=10.20%
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