Question: You have been approached by a food retailer that is interested in buying into the largest food wholesaler in Kenya. He has asked you

You have been approached by a food retailer that is interested in buying into the largest food wholesaler in Kenya. He has as Peer Company Checkers Woolies Pick n Pay Shoprite Raw Beta 1.295 1.277 0.903 1.725 D/A 7.20% 3.80% 22.80% 13.00% Tax Rate 28

You have been approached by a food retailer that is interested in buying into the largest food wholesaler in Kenya. He has asked you to assist in calculating an appropriate WACC for his valuation, and specifically requested that you apply the Damodaran international cost of capital method. Using the data provided, calculate the cost and equity and WACC. Peer Company Checkers Woolies --------- ------------ Pick 'n Pay Shoprite P Target D/E US Risk-Free ...... --------------------- US EMRP ....... US Inflation ------------ Kenya CRP Kenya Inflation Kenya Tax Rate --------------------- Relative Vol. Factor Debt Margin Raw Beta 1.295 1.277 0.903 1.725 Other Inputs 0.66 *********** 29.70% 2.00% 5.80% . 1.50% ... 4.86% 5.62% 30.00% ....... 1.19 ......... 0.95% ...... D/A 7.20% 3.80% 22.80% 13.00% Tax Rate 28% 28% 28% 28% Weight 15.38% 8.12% ... 48.72% 27.78%

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