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Calculating WACC Everything Corp. has operations in many different businesses, including the manufacturing of toasters. Find the WACC appropriate for discounting the cash flows associated
Calculating WACC
Everything Corp. has operations in many different businesses, including the manufacturing of toasters. Find the WACC appropriate for discounting the cash flows associated with an expansion in its toaster manufacturing business. See the handout for additional instructions.
Unlever Beta
Comparable Levered beta E DV Unlevered beta A NOTES:
Franklin Toaster beta AEVbeta E
Ohio Toaster
Superior Toasters
AVERAGE beta A
Relever Beta
Target DV
Relevered beta E beta Ebeta AEV
Cost of Equity
ig year treasury rate
Rp market risk premium
KE KEigbeta Rp
Cost of Debt
Bond rating estimated from comparable data
Premium premium over treasurys
KD
WACC KW
t from last year's operating results
KW KWDVKDtEVKE Q: Under the assumptions given, what is the appropriate WACC for Everythings investment in toaster manufacturing? Q: Suppose that Everything determined that the appropriate target debt ratio for their toaster division would really be What would be the WACC?
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