Homework Answers
Answer:
We will use the market values of equity and debt to get the WACC. Market values will reflect the current capital structure of the company
Market value of equity = $2.47bn
Market value of debt = $0.77bn
Total capital = $2.47bn + 0.77bn
Total capital = $3.24bn
We = 2.47/3.24 = 76.23%
Wd = 0.77/3.24 = 23.76%
Wacc = We*Re + Wd * Rd(1-t)
Wacc = 76.23% * 13.2% + 23.76% * 8.1% (1-0), Dividend yield will not be used in calculation of WACC
Wacc = 11.98%
if you have any questions, please post in comments section. Thank you
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