The second WACC calculation based on Gordon equity payouts is not applicable currently because Whole Foods total equity payouts show that in the past 3 years the company has absorbed equity from the capital markets (p. 104 of the textbook in detail). Suppose the cost of equity based on the total equity payouts now becomes available and is 9.71%. Using this new cost of equity, compute the second WACC based on Gordon equity payouts.

COMPUTING THE WACC FOR WHOLE FOODS MARKET (WFM)
Shares outstanding	183.56	<-- Millions
Share price, 29 June 2012	95.32
Equity value, E	17,497	<-- =B2*B3, Millions
Net debt, D	-728	<-- Millions
Tax rate, TC	37.90%	<-- ='Page 75, bottom'!D5
Cost of debt, rD	4.72%	<-- From financial statements, interest on term loan
Expected market return, E(rM)	8.45%	<-- ='Page 102'!B5
Risk-free rate, rf	0.06%
Equity beta, b	0.51	<-- From Yahoo
WACC based on Gordon per-share dividends
Current dividend/share	0.56	<-- ='Page 104'!B5
Growth rate	5.47%	<-- =AVERAGE('Page 104'!B9:B10)
Cost of equity, rE	6.09%	<-- =B13*(1+B14)/B3+B14
WACC	6.23%	<-- =B15*$B$4/($B$4+$B$5)+B7*(1-$B$6)*$B$5/($B$4+$B$5)
WACC based on Gordon equity payouts
Current equity payout	Not applicable
Growth rate
Cost of equity, rE
WACC
WACC based on classic CAPM
Cost of equity, rE	4.34%	<-- =B9+B10*(B8-B9)
WACC	4.53%	<-- =B25*$B$4/($B$4+$B$5)+B17*(1-$B$6)*$B$5/($B$4+$B$5)
WACC based on tax-adjusted CAPM
Cost of equity, rE	4.33%	<-- =B9*(1-B6)+B10*(B8-B9*(1-B6))
WACC	4.52%	<-- =B29*$B$4/($B$4+$B$5)+B21*(1-$B$6)*$B$5/($B$4+$B$5)
Estimated WACC?	5.09%	<-- =AVERAGE(B16,B26,B30)