Because I'm such a nice guy.
unlevered b=levered b/(1+(1-T)(D/E))
unlevered b=1.3/(1+(.75)(2))
unlevered b=.52
Now relever
levered b=unlevered b(1+(1-T)(D/E))
levered b=.52(1+(.7)(2.3))
levered b=1.357
ke=rfr + b(mr-rfr)
ke=3 + 1.357(9-3)
ke=11.14
kd=yield*(1-t)
kd=12*(.7)
kd=8.4
Now solve for WACC. Be careful with the D/E ratio.
We=1/3.3=.303
Wd=1-We=.697
WeKe + WdKd=WACC (we already did the tax stuff)
.303*11.14 + .697*8.4= 9.22 |