5. Based on the following information , find out WACC: In million $: total assets $160.00 ,...
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5. Based on the following information , find out WACC:
In million $: total assets $160.00 , debt 40% , net income $12.00 , dividends 60% of the net income, last dividends of $1 , market price of our stock $20 , expected real rate of interest and inflation 4% and 3% respectively , debt risk premium 2% , tax rate 20% . Assume that the growth rate is constant and limitless 15% .
I use the formula WACC= (E/D+E)*Ke + (D/E+D)*Kd*(1-tax)
So far, I got WACC=(96/160)*Ke + (64/160)*Kd*0,8.
I dont know if what I got so far is correct, but if it is, what I dont know how to calculate is the cost of equity and debt (Kd and Ke). Also, I dont know what to do with the growth rate and how to use the information about inflation.
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