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Value Weight Required Rate of Return

The document provides the weighted average cost of capital (WACC) calculation for a company with an equity value of $194,755, a debt value of $129,678, a total value of $324,433. Using a 60% equity weighting and 40% debt weighting, the WACC is calculated to be 7.15%, based on the required rates of return for equity of 8.57% and debt of 4.42%.

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49 views3 pages

Value Weight Required Rate of Return

The document provides the weighted average cost of capital (WACC) calculation for a company with an equity value of $194,755, a debt value of $129,678, a total value of $324,433. Using a 60% equity weighting and 40% debt weighting, the WACC is calculated to be 7.15%, based on the required rates of return for equity of 8.57% and debt of 4.42%.

Uploaded by

ravinyse
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Weighted Average Cost of Capital (WACC)

Value Weight Required rate of return


Equity (fair value) 194,755 0.6 8.57%
Debt (fair value) 129,678 0.4 4.42%
324,433 1
Equity (fair value) = No. shares of common stock outstanding × Current share price

WACC =

Rf 2.98 2.98
Market Return 12.52 12.52
beta 0.59 0.59
expected return 8.57
E / (E + D) * Cost of Equity + D / (E + D) * Cost of Debt *

-0.1538457432
(1 - Tax Rate)

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