Question: Based on the information here, how can I find the cost of debt rD (cell 32). 1 Assumptions Capital Expenditure 1,500 USD million EBIT (Year

Based on the information here, how can I find the cost of debt rD (cell 32).

1 Assumptions Capital Expenditure 1,500 USD million EBIT (Year 1) 170 USD million Depreciation (Year 1) 150 USD million Increase in Net Working Capital (Year 1) 40 USD million Increase in Net Working Capital (Year 0) 30 USD million Tax Rate 21% FCF's Growth Rate 5% 5% 2% 2% 2% 2% 2% 2% Year 0 1 2 3 5 6 8 9 10 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 EBIT 170 Less: Taxes 36 Unlevered Net Income 134 Add: Depreciation 150 Less: Capital Expenditures -1,500 0 Less: Change in NWC -30 -40 FCF -1,530 244 257 269 275 280 286 297 297 303 309 5 Discount Factor PV = FV X (1 + r)" -Discount Factor Present Value of FCF NPV Refer to lecture 2 video "Use Excel to Value Any Cash Flow Streams" or lecture 6 video "Capital Budgeting using Excel - Solution to the Slide Problem 2a risk free rate (10-year Treasury Yield) 2.894% ii equity beta 0.59 iii expected market risk premium 4.00% cost of equity rE 5.25% Note that rE = risk free rate + equity beta * expected market risk premium, NOT risk free rate + equity beta * (expected market risk premium - risk free rate) 2b S&P's Rating A+ debt beta 0.05 cost of debt rD 3a 2021 1.0638 Cash and Short-Term Investments $0.0503 USD mill Debt in Current Liabilities $0.0921 USD million Long-Term Debt - Total $0.1261 USD million Net Debt $0.1678 USD millior "Debt in Current Liabilities" + "Long-Term Debt - Total" - "Cash and Short-Term Investments" 3b Stock Price $180.25 USD Refer to the instruction video "WRDS - Download Financial Statements and Stock Price Data" on how to download the stock price in the WRDS. Extract its closing price in March, 2021 Shares Outstanding 1,377.830 millions The variable "SHARES - Outstanding at Fiscal Year End" reported in the WRDS is in the unit of millions. Market Value of Equity $248,354 USD millior Stock price * Shares Outstanding 3c Enterprise Value $248,354 USD millior MV Equity + Net Debt 4 WACC D E + D' E +DD( 1 - 7.)

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