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WEIGHTED AVERAGE COST OF
CAPITAL |
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CAPM-based cost of equity
with market-weighted capital structure |
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COST OF EQUITY (CAPM) |
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Source / Notes |
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Risk-Free Rate (Rf) |
4.20% |
10-Year US Treasury yield |
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Equity Risk Premium (ERP) |
5.50% |
Damodaran / Duff & Phelps
estimate |
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Levered Beta |
1.15 |
Bloomberg / peer regression |
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Size Premium |
1.00% |
Duff & Phelps size premia study |
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Company-Specific Risk Premium |
0.50% |
Analyst judgment |
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Cost of Equity (Ke) |
12.03% |
Ke = Rf + Beta × ERP + Size + CSRP |
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COST OF DEBT |
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Pre-Tax Cost of Debt (Kd) |
5.50% |
Weighted avg coupon on outstanding debt |
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Marginal Tax Rate |
25.00% |
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After-Tax Cost of Debt |
4.13% |
Kd × (1 - Tax Rate) |
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CAPITAL STRUCTURE |
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Market Cap ($mm) |
10,500.0 |
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Total Debt ($mm) |
1,500.0 |
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Total Capital ($mm) |
12,000.0 |
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Equity Weight |
87.50% |
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Debt Weight |
12.50% |
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WACC CALCULATION |
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WACC |
11.04% |
WACC = We×Ke + Wd×Kd(1-t) |
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WACC SENSITIVITY
(Terminal Growth vs. WACC) |
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Note: Detailed
sensitivity tables on the Sensitivity sheet. |
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