Question: no excel formulas. Please show step by step. Ty Exam 4 - examples 1. WACC calculations example: Desert Rose Cosmetics, Inc. (DRC) is a U.S.

no excel formulas. Please show step by step. Ty

no excel formulas. Please show step by step. Ty
Exam 4 - examples 1. WACC calculations example: Desert Rose Cosmetics, Inc. (DRC) is a U.S. multinational company with the following debt and equity components in its consolidated capital section. DRC evaluates all its business decisions using the U.S. currency. Common shares are only listed on NYSE. Assumptions Value Tax Rate 25.00% 15-year 4% Euro Bonds (euros) selling at par E5,000,000 10-year 6% Pound Bonds (pounds) selling at par $3,000,000 Spot Rate ($/E) $1.25/E Spot Rate ($/{) $1.40/E Number of common share outstanding 2,000,000 Stock price $20/share Stock beta 1.30 Risk-free rate 4% Market expected return 10% a. What is DRC's cost of equity (Ke)? b. What is the market value of DRC's total debt outstanding in US$ (D)? c. What is DRC's overall pre-tax cost of debt (ka)? d. What is the weight of debt financing in US$ (D/V)? e. What is DRC's WACC

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